How Do House and Land Packages Work?
When you look at purchasing a new home and it comprises of a house and land package, this is where you would have a contract to buy the land, and also a contract for construction.
In many cases, if you are purchasing from a builder, both of these contracts are available at the same time, as you would be purchasing both the land and the property from one person.
When these are advertised, the package is listed as one, and as an example: a home being built at the finished price of $400,000, will end up with two separate contracts. One for the home and one for the land.
Behind the Scenes
This can be an important factor as many borrowers are under the assumption they have no repayments to make until the property is completed, when in fact, the land must be purchased first and then repayments on the completed home would start later.
If you go by this route, it is crucial you understand the implications of this because as soon as you start the process, you will be making repayments against the land purchase, and you may well be in a position where you are still, in fact, renting at the same time.
Some builders will also ask for “progress payments” whilst your home is under construction, and the first being requested as soon as the concrete foundation slab has been poured. As with all of these steps, you would see repayments increase with each incremental step of the construction.
House and land packages work in a specific way, and some people find they are unable to make the repayments while they are still renting. So, if you find this is the case, you may see “off the plan” purchases as an easier option.
If you find that this route is an ideal option, there are many factors you should consider before committing yourself. You should ask yourself, how do house and land packages work for you?
Choosing the Right Community
The right community can have a bearing on your lifestyle and should meet your needs; essentially, the things to think of are:
- Commuting time to work or visiting family and friends.
- Community design would incorporate how it relates to the landscape and the social infrastructure like schools and childcare.
- Are there good transport options and are shopping areas easily accessible?
- Are there open public spaces within a reachable distance?
Smaller lots are often around 300 sqm and are generally closer to open areas and major access roads. Larger homes are more internal where they have more space for backyards and pools. When looking at lots you should consider:
- The actual shape of the lot in question.
- The slope of the area. Is it flat or on an incline?
- Is the house facing or the backyard facing the afternoon sun?
- Is the land elevated to provide a balcony with views?