Is a House and Land Package Right for You?

The dream of being able to build a new home is one that plenty of people have and a house and land package can help to make this a reality. If you have not owned a home in the past, then the opportunity to purchase this type of package can be inviting because of the incentives offered to first-time home buyers. There are a wide range of banks that offer loan options which allow people to purchase land and then have a new home built on that land. This option is affordable and opens up so many great options for those who want to build their own home. If you are wondering about what is good and what is not so good about these options, we are going to take you through what is involved in the process of purchasing a house and land package.

House and Land Packages – Affordable

If you would like to purchase a property and then build your dream home, purchasing a house and land package is a really great option. You are able to have control over the process of building and choosing from various options. You also have the option of buying the lot and allowing a builder to build the home from a plan you have already approved in advance. There is also the option of the “turnkey” home where the house is already built, and you simply purchase the house and land once it has been completed. When you purchase bare land and then build a home on it you have more say in how the home is constructed, the various options and our personal choices.

Whether you decide to work with a builder or purchase a turnkey home, you still are purchasing a newly built home. This is an affordable way to be able to enjoy the benefits of a new home. There is not shortage of options when it comes to home choices and lot sizes for house and land packages. Land is purchased and then it is built on which saves the buyer stamp duty. The reason for this is that stamp duty can only be applied to the value of the land as it is purchased. First time home buyers are eligible for the First Homeowner Grant when they build a new home.

Deposit Required

If you plan to purchase a house and land package you will need to have saved up a deposit. This amount is a percentage of the purchase price. The purchase price might not be inclusive of extra costs and if this option is chosen you might have to consider all of those extra costs. These costs might include land tax, legal fees, permits and surveys. There may be some concessions to stamp duty if you are purchasing a package deal such as a house and land package.

What are the Disadvantages to House and Land Packages?

If you want to buy a home, the house and land package option is a good one, but there are certain drawbacks that need to be factored into your decision.

• You need to consider “hidden costs”.  Touring a display home can assist you in your decision-making process when you are looking to think about the extra options that you could include into your home. When something is extra, that means that it will cost you more money to include it when the home is built. You should clarify with the builder everything that will be included in the price that is quoted to you and ultimately agreed upon. If there is anything that you do not understand, you should ask about it.
• Purchasing land in a rural area means added costs to commute to work if you work further away from where you reside. Building in a rural area also means increased costs for building materials because of increased transport costs. Your commute to work could be longer and the costs of the commute could be more than just monetary. Using public transportation could help save money.
• The cost of the project could increase. Purchasing a house and land package means that you have the opportunity to create a custom home which is what you have always wanted. You want to be able to afford any extra costs so that you are able to pay for the whole build.
• Lot size could be smaller. When you are purchasing a house and land package, the lots created and then sold could be smaller so that the developer can make more money. The good part of this is that the package will be more affordable, but it could also mean that you have to be creative with the placement of your home. You want to be able utilize the land and get the best layout for your home while having the privacy that you need.

House and Land Package Negotiations

If you are considering the purchase of a house and land package, you should visit your bank and apply for a pre-approved mortgage. This helps you to understand what you can afford when you are looking to buy a house and land package. If your heart is sent on the purchase of a house and land package, then you should be able to understand how much you can afford before you try to purchase a home that may be out of your price range.

Pre-approval means that the bank will closely look at and consider your debts and then subtract those payments from your income. Whatever is left over will help the bank to understand how much you are able to afford to pay for your mortgage each month.  This number and the amount of money that you earn, together with your credit history will help the bank to determine the amount of money that they will loan you. Once they have provided you with a commitment, they will hold the rate on that mortgage for a specific amount of time.

Knowing how much you can afford means that you can understand which properties are in your price range. You can then make a purchase and get your home built. Mortgage brokers are ideal for pre-approvals because they will compare lenders and have them competing for your business. These lenders will offer you options that you may not be able to access when you only go to one lender for a mortgage. A mortgage is a very large commitment, and you want to be able to understand the financing that you are committing to. This will help you to make the best decision on a house and land package.

What Should a First Time Home Buyer Consider?

If you are a first-time home buyer and you are looking at house and land packages, it may help you to understand the 5% down option. This is known as the First Home Loan Deposit Scheme Guarantee and can only be used when purchasing a new home. If you are buying a house and land package with this option, there are some strict guidelines to follow.

First, you will need to start building your home six months after you have signed your contract and it has come fully into effect. You will need to finish building the home within two years of the contract’s effective date. Once the home has been completed, you will need to move in six months after the issuance of the occupancy certificate.

Are you Ready to Commit to a House and Land Package?

There is a lot of negotiation room for financial pre-approval and having financing in place will give you an advantage over other buyers since you are able to close a deal quickly. Builders do not like to wait for a long time for a buyer to get financing in place. If you want to be able to negotiate a fair deal, pre-approval can help you to get what you want quickly. You can start looking in all of the areas that you would like to live in. Once you know the right area, you can then look at house and land packages there.

A house and land package will allow you to build your new home in an area where there is not a lot of residences already in place. This can ensure that you have both affordability and privacy and the choices you want to make when building your new home. Most people are not aware that they can work with a builder to get what they want in their new home, so this offers savvy buyers another advantage. Home buyers that want to purchase an as built home so they are automatically removed from your competition as you search for the area where you will build your dream home. Costs for customizations to your new home are generally comparable to renovation costs in an as built home, so this is advantageous to the person who wants to buy a new home. Purchase a house and land package is a great option and you should consider it if you are looking for a new home.