House and land packages enable you to build the home you want, where you want to build it. With the right advice, you may be able to borrow up to 95% of the value, and take advantage of grants and other government schemes. There are also stamp duty concessions for first home buyers that may be applied in some states.
How Does A House And Land Package Work?
A house and land package involves buying the land and committing to construct a home simultaneously. Commonly the land is purchased from a developer who then constructs the home for you. Although these opportunities may be offered as a single package, it’s important to note that there are in fact two contracts. The first contract is a land contract, with the second being for the build. Generally, this would mean that the purchaser will be paying for construction before it is completed. (Off-the-plan developments work differently, where the home is not paid for until it has been built).
Settlement Of The Land
In reality, what happens is that the land contract will settle first; and thereafter the home loan will be drawn on and repayments for building will begin. Repayments are calculated only on what has been drawn, though the land loan portion has to be paid from the outset. If you are still renting or paying a mortgage elsewhere, it’s important to factor this cost to ensure your cash flow is strong enough.
When the builder has started construction, progress payments will be requested. This simply means that you will be liable to draw on your financing and pay for work in line with a contract of structured payments as different phases of the build are completed. Remember that as your loan increases, so do your repayments.
House And Land Package Home Loans
Contact Building Loans Australia today, and we’ll help you strategise your house and land package. We’ll help you access grants where they are applicable, and source the best loan for your individual situation and requirements. We may even be able to use grants that are available to you as the deposit you need to secure your loan.