If you have ever dreamed of building a new home, then a land and house package may be the right option for you. If you have never owned a home in the past, this offer can be even more attractive because of the financial incentives offered both for a first-time home buyer and for someone who wants to purchase a house and land package. Many banks offer options for loans that allow you to purchase land and then construct your new home on it. It is not only an affordable option but a hassle free one. There are pros and cons, and we will review those here to give you a better idea on what is involved if you are considering the purchase of a house and land package.
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House and Land Packages are an Affordable Option
If you are looking to purchase a property and build a home that you can call your own, then the option of purchasing a house and land package is a good one. You will have a say in every aspect of the build from start to finish. There are also options where you can simply choose the lot and then the home is already designed and built so that all you will need to do is move in once you are ready. Most of the time when you choose the “turnkey package” it means that the home has already been built when you purchase the property. You can tour the home at the same time you look at the area. The other option is to purchase land that is vacant and then choose the home that will be built on that land. This allows you to have complete input on every aspect of the build which means that your new home will have all of your personal preferences built into it.
Either option of you working with the builder or purchasing an as built home are good. These options are an affordable way for you to access all of the benefits of building your new home. With so many options on lot sizes and combinations for house and land packages, when you purchase the land first and then build on it, you are able to save money on stamp duty because it is applied only to the land’s value when you purchase it. You can also access the First Homeowner Grant if you are going to build a brand-new home.
When you are ready to purchase a house and land package you will require a deposit. The purchase price may not include extra costs and if you choose this option, you will need to consider what those extra costs may be. There are costs including legal fees and land tax and building standards need to be met. You could be eligible to some concessions the stamp duty if you are buying a house and land package.
Are there Drawbacks to Purchasing a House and Land Package?
House and land packages are a good option if you want to by a home, however there are some drawbacks that you should factor into your decision, including:
- Lots are sometimes smaller. As lots in house and land packages are created and sold, the developer may decide to create smaller lots in order to increase profits. This also means that the house and land package is made more affordable and it can also mean that the home built on the land needs to be constructed in such a way that it is utilizing the land to its full potential while ensuring that you have privacy from your neighbours.
- If you purchase land in a rural area, you may increase transport costs. This means that building materials shipped to the location will have higher shipping costs. It also means that if you have to get to work that you will have a longer commute and your costs to get to work will increase. You could ensure that those costs do not increase too much if you can travel to a park and ride and then take public transit.
- There are always hidden costs. You can always tour a display home, and this can help you to make a decision on what extra options you might want in your home. If something is an “extra” then that means it will cost more for you to have it included in your build. Always ask the builder to specify what is included in the quoted price so that you have a complete understanding on what you are buying and what is extra.
- Costs can always increase. When you buy a house and land package you are also buying the opportunity for a custom home that is exactly what you have always dreamed of. You should always ensure that your budget is able to deal with all extra costs and that you have enough money to pay for the entire project from start to finish.
Negotiating Your House and Land Package
It is good practice to speak to a bank and get pre-approval so that you have a better understanding on what you can afford when you start looking at house and land packages. If you believe that purchasing a house and land package is a good option for you then you need to have an understanding of your affordability range before you start looking around at places that are not in your price range.
With pre-approval, the bank will look at all of your debts and obligations and subtract those from your total income. The number left over will let the bank know how much you can afford to pay monthly on a mortgage. Based on this number, the amount of money that you earn and your credit history, the bank will then offer you a mortgage and hold the rate on that mortgage for a certain amount of time. You can then have a good understanding of your budget and it will allow you to make better decisions on the property that you purchase and the home that is then built upon it. Mortgage brokers are a good option for pre-approvals because they will shop around for you and have the lenders competing for your business by offering you options that are competitive. Since taking out a mortgage to purchase a home is a big commitment, you want to have a good understanding of the type and amount of financing that you qualify for. This can help you to make a better decision on packages that work for you.
First Time Home Buyers – Considerations for House and Land Packages
First-time home buyers can look at house and land packages and can purchase these with 5% down using what is called the First Home Load Deposit Scheme Guarantee. This option can only be used for the purchase of a new home. When you purchase a house and land package under this option, there are some tight guidelines. You will need to commence building within the first six months after the contract is signed and effective. You will also need to complete building your home within two years of the effective date of the contract. After the completion of your home, you must move into it within six months after your occupancy certificate has been issued.
Look long and hard and consider all of your options when it comes to house and land packages. You do have plenty of room to negotiate once you have been pre-approved for financing and the financing does offer you the advantage over other buyers to be able to close a deal quickly once you find what you like. Builders do not want to wait for buyers to obtain financing and this can offer you all of the advantages that you need to be able to negotiate a fair deal. If you are looking at purchasing a house and land package, familiarize yourself with all of your local areas and decide where you wish to live.
The house and land package option allows you to build in an area where there may not currently be a large population and this can provide you with privacy, affordability and all of the options that you would like to have in a home. Not everyone knows about the option of being able to work with a builder to get what you want, so this is where you will have the advantage over other buyers. There are home buyers that just want to purchase a used home and you can get away from the competitiveness of that by purchasing a house and land package and building a home that is customized to you. Whatever costs you spend on your customizations would be similar to renovation costs in a used home, so that can work out in the end to your advantage. The option of purchasing house and land packages is an exceptionally good one, and one you should consider if you are looking for a new home.