Ever thought about building your first home?
Get the lowdown on house and land packages to find out if it’s the right choice for you.
In some states around Australia, there are better incentives available to first home buyers who are prepared to build or buy a new home. So just what can you expect if you follow this path to owning your first home?
Flexibility vs location
One of the greatest advantages of building your first home is having more control over the floor plan. Plus, you’ll have a home that’s likely to be more energy-efficient and demand less maintenance. But in most cases, you’ll be trading this off against a location close to the CBD. Vacant lots in city fringe suburbs are in pretty short supply and attract a high price as a result. Add in the cost of building a home and you’ll usually find it’s cheaper to buy an existing property in the majority of urban areas.
Why buy off the plan?
Buying a house and land package is also known as buying off the plan. You select a block of land in a new development and choose a standard home design and a builder to construct your new home. As well as giving you more freedom to choose where and how you want your home to be built, this approach can offer better value too. With vacant land, stamp duty is only levied on the land value, but if you’re looking at a house and land package, higher stamp duty will be payable. However, some concessions may apply to new developments, depending on where you live.
Developers want to sell before they build to meet their own finance requirements and will sometimes offer discounts to reach their targets for properties sold pre-construction.
What to expect
Shopping for a house and land package starts with choosing the neighbourhood where you want to live. Important issues to consider include access to transport links, particularly if you need to travel to work, and local facilities – parks, retail precincts, schools and medical services.
And when you’ve picked your development, start to narrow down your choice of lot according to the size and shape and how close you want to be to the hub of your new community. You’ll also need to bear in mind how your block could affect the type of house you’ll build and how much it costs. For a sloping block, for example, you may need to allow extra budget for a custom-designed home that works with the gradient of the site.
Finally, you’ll need to choose a home design, and a builder to work on putting it all together. Taking a good look at designs available in your price range and what’s included in the build and the contract is absolutely essential.
Arranging finance
For buying a home and land package, you’ll need two loans – one for buying the block and one for construction. Most lenders can bundle these loans to keep things simple. With the construction loan, you’ll draw down funds in stages as the build progresses and you’ll only pay interest on the money as you use it.
Our handy Construction Guide can really help you weigh up your options for buying a house and land package and find out more about what’s involved. Speaking to a Loanseeker broker can help you understand what you can afford and how to go about arranging finance and applying for government incentives.