A house and land package will likely be more affordable than buying established homes. If you view your home as an investment, you will definitely squeeze more in capital growth from your private dwelling.
A house and land package will allow you to save and gather momentum from the time you put in the deposit to your home’s actual construction.
Depending on the property, lenders have different requirements and loans to suit the home you’re considering for first home buyers.
Getting approved for a mortgage is harder today than it was a few years ago, according to Home Loan Experts managing director Otto Dargan, so the first step is to talk to a mortgage broker or your bank and find out if you qualify for a loan.
If you are looking for a forever home, you can’t go wrong with living in Brisbane. It is one of Australia’s best cities in terms of key indicators like access to amenities, stable economy, education, environment, connectivity, walkability, and proximity to the beach.
Among the most sought-after suburbs in Brisbane are Wilston, Alderley, and Ascot, which ranked high in the livability index. Nevertheless, other neighborhoods like Newmarket, Red Hill, Ascot, and Paddington are also right up there in the ranking.
Paying for a house and land package
Most lenders provide loans for house-and-land packages, but be aware that you’ll need a construction loan and some lenders won’t offer these to people who are self-employed or have a bad credit history.
Financing a House and Land Package is a Two-Step Process
Step 1 (Buying the land): The land is purchased with a simple mortgage loan.
Step 2 (Construction): The house is built with a construction loan.
While you may choose to finance each loan through a different lender, combining the loans allows you to have separate but simultaneous contracts with both the land developer and the housebuilder even if they are from different businesses.
One of the main benefits of the package approach is that the construction loan allows you to ‘drawdown’ on an agreed amount to pay during each stage of the building process. This means that you only pay interest on the specific money you are using during each stage that the home is built.
Finding the Right Loan
Obtaining a loan for a house and land package is very similar to taking out an ordinary home loan and is offered by many major banks and non-bank lenders.
The bank will require the same checks and balances before you can obtain a mortgage, this will include a valuation on the land and an outline of the proposed home structure.
The mortgage loan will be subject to the same terms as a normal home loan. A lump sum will be borrowed and you will be charged a fixed or variable interest rate depending on the financial institution you choose.
Comparing the interest rates, fees and features of the lenders on offer will ensure you achieve the most affordable loan for your house and land package.
Additional Costs for a house and land package
When considering a house and land package it is important to be aware that most lenders will require you to pay a deposit for both the home and land loans.
This should be taken into consideration when choosing which financial institution to provide the loan. It is also important to ask the building company about what is included in the quoted price, to ensure that there will be no surprises and additional fees included for standard features.
The house and land package is becoming increasingly popular among home buyers and property investors. Seeking advice from a trusted financial advisor and home builder is the first step towards achieving an affordable home loan.