June 04, 2024 by Mortgage Choice Wantirna
There’s nothing like a sparkling new home, and right now a swag of financial incentives could be up for grabs when you buy or build a new place. If a brand-new home is on your wish list, a house and land package can be a hassle-free and affordable option. We explain the pros and cons to help you enjoy a good buy.
House and land packages can be very affordable
House and land packages come in two varieties. A ‘turnkey’ package typically offers a newly built home on a particular lot – all the buyer has to do is turn the door key and their home is ready to go. Alternatively, a home and land package provides the flexibility to buy vacant land first, and then build a home from a set range of builders and designs.
Both options could be a very affordable way to enjoy the benefits of a new home. You may also be eligible for other savings too. Buying land first and building later provides savings on stamp duty, as duty is only levied on the value of the land. In addition, financial support such as the First Home Owner Grant, is often only available for newly built homes.
House and Land Packages as a First Home Buyer
If you’re a first home buyer and are looking to purchase land to build your home on, you may be able to purchase a modest home with a deposit as little as a 5% under the Government’s First Home Guarantee Scheme, as well as receive some cash back in your pocket from the First Home Owner Grant. However, it is important to understand that you must start building within 6 months of entering the contract, finish building within 24 months and move into the property within 6 months of the occupancy certificate being issued.
Some things to watch out for:
1. The hidden costs
It can be great fun to check out display homes, but remember, these are showroom pieces, which may include features like landscaping that come at an extra cost. Ask the builder for a detailed breakdown of what’s included in the price you’re being quoted so you know exactly what your money is buying.
2. The potential for blow outs
House and land packages can offer opportunities to alter a home’s design. This is an opportunity to customise the building to suit your block and lifestyle, but even small deviations from the ‘standard’ design will push the price up. Be sure your budget can handle any extra costs.
3. Lot sizes can be small
Lot sizes in new developments have become smaller over time, and currently average less than 395 square metres in Sydney, Melbourne and Perth4. This helps to keep house and land packages affordable, though it does make it important to think about how your new home should be oriented to make the most of your land – and your privacy.
4. Will the location add to transport costs?
House and land packages are typically available in outer suburban locations. This can mean a long weekday commute if you work in a city centre. Australians already spend around 13.8% of household income on transport costs5, and if your new subdivision has limited public transport options, the cost of travelling to and from work can quickly add up.
Pre-approval lets you know what’s affordable
If a house and land package sounds right for you, it’s important to speak with a home loan expert at an early stage. At Mortgage Choice Wantirna, we can explain your borrowing power - which gives you the starting point you need to know how much you can afford to spend on your new home.
It also makes sense to talk about getting a home loan pre-approval. That way you have a clear idea of whether there’s room in your budget to customise the design and stamp your personality on your new home.
Give us a call to chat about potential house and land purchase on 03 9432 5484 or email dwayne.birttain@mortgagechoice.com.au.
