As an aspiring first home buyer, you would probably be exploring all the different ways you can achieve your dream of becoming a homeowner. You might have come across “home-and-land package” in your search, but do you know what they are and how they work?
House and Land Packages
The land that is released by the government is quickly acquired by property developers. With these lands in their possession, property developers provide homebuyers with two types of home-and-land packages. The first package is to buy the land and then build a home using a construction loan. The second one allows you to buy the home completed on the land owned by the developer. This is referred to as ready-built packages or turnkey properties. In layman’s terms, your home will be ready for you to move in with all your stuff.
Ready-built packages are generally a better option as they won’t leave you with any surprises like builder asking for more money during construction because they underquoted. All the costs will be laid upfront right from the start and you will also know the expected time for the completion of your home.
You can find home-and-land packages on several real estate listing sites. You can also reach out to property developers to find the package that is right for you. Make sure to shop around and explore the packages offered by various developers. This would help you find the best home-and-land package.
Purchasing House and Land Packages
The finance arrangements for purchasing a home-and-land package are quite different from those that you have to make when buying an existing house. If you are buying the land first and then building your new house on it, you’ll have two contracts – one for a loan on the land and another for the construction loan that you will take to build the house. The loans can be separate or combined together.
You won’t get the whole amount of your construction loan all at once. Instead, the amount is drawn down in different stages of construction. For instance, out of $400,000, $50,000 may be released for pouring the concrete slab and another $50,000 may be given to erecting the roof and walls.
Things are a little simpler with turnkey properties. In this case, two contracts are merged together and since the prices of the home and the land are fixed, the funds are immediately released to the property developer and you, allowing you to move into your new home straight away.
When constructing your own home, you’ll be able to make more changes to the design and customise your property to accommodate your needs. You will be presented with a range of home designs to choose from, and you’ll have the option to make changes and add on extras. Updates you select will increase the cost of the home, so make sure you don’t go overboard with them.
Things You Must Consider When Getting a Home-and-Land Package
An important factor to consider when buying a home-and-land package is the overall infrastructure of the community. If the area is in the early development stages, there would be a lack of public transport. This won’t be a major issue if you commute in your own car but will be a problem if you rely on public transport on a daily basis.
Another thing to keep in mind is that some home-and-land packages come with inflated costs for commissions and marketing, which aren’t always transparent. These additional costs will increase the overall price of the package, so make sure to check the contract for any hidden charges.
Make sure to do thorough research and ask questions from experts before going forward with a home-and-land package. If you buy the land in a particular area without proper research, you might have to pay more money. For instance, if the land is situated on a slope, more construction work will be required and thus the costs will escalate.
Costs Involved in a Home-and-Land Package
When building your own home, you will generally need a 10 per cent land loan deposit and a 5 per cent construction loan deposit. Stamp duty on home-and-land packages applies to the land only, whereas you are required to pay the full home when buying established homes.
When you build a new house, you won’t have to worry about hefty maintenance costs for a couple of years. With a fixed-price, ready-built packages, there are no hidden charges. A few other costs you must consider when considering a home-and-land package include legal charges, bank fees, and conveyance fees.
Final Thoughts
A home represents a major investment for all Aussies. While a home-and-land package can be a good option, they come with their own share of issues. You should do some research on them and only buy a package if you find it a better option than investing in an already established home.
Don’t sign on the dotted line until you are completely satisfied. Also, make sure to check the contract for hidden costs. If you take the right precautions, a home-and-land package may allow you to become the proud owner of a house you have always dreamt of.