House and land packages are gaining popularity, which may be beneficial to investors. However, if you are serious about building a home that suits your lifestyle, you should steer clear of these packages.
Unless the builder already owns the block, houses and land packages are not legally binding and are merely marketing tools.
House and land packages are often advertised for sale as marketing brochures providing a floorplan for plotting onto a block of land. You are encouraged to get involved and sign up as soon as possible when you are still contemplating your options.
Although it might seem convenient to sign up for a House and Land package, it might not be your best option.
If you opt not to use a package, you may wonder whether it will cost more. You might think that, yes, but it’s not necessarily true. You’ll soon discover that there can be many hidden charges that the advertised package does not include once you do your homework. Container homes are usually advertised as being cheaper than custom-built homes due to the reliance on bare-bones price points.
After all the costs involved in completing the house are considered, the price might be similar.
Can you tell me how much it costs to buy a house and land package?
A home can be built on any plot of land by any contractor. Custom homes have several advantages, including making it your ideal location, not a package someone else has put together.
It is possible to buy a house and land package in two ways. With a turnkey package, buyers get a newly built home on their lot, with nothing but turning the key to move in. The option of buying vacant land and then making a home offers a lot more flexibility. You can pick your builder and design after you purchase vacant land.
Packages of land and houses are available in two varieties. Turnkey homes usually offer a newly built house on a particular lot ready for the buyer to move into. It’s just a matter of turning the key, and everything is taken care of. A home and land package allows you to choose a builder and design from a limited selection of builders after you purchase vacant land.
The benefits of owning a new home get enjoyed in both of these options for a very affordable price. A guide will estimate the median house price in the southwest of Sydney at about $1,186,518 if you combine the house and land value of $790,000.
Financial requirements for purchasing a land and house package
House and land package loans generally require a 5-10% deposit.
However, a house loan that exceeds 80% of the property value might require you to purchase Lenders Mortgage Insurance (LMI).
It is the only job specification of a mortgage broker to determine what deposit you’ll need before you sign a house and land package.
What costs are involved in buying a house and land package
The land and house will both need to be covered by the loan. In some cases, a construction loan may be an option. According to need, a construction loan is funded through multiple installments (not one lump sum) and paid to the builder as construction advances.
A loan provided over time can be a good thing for you since the initial borrowing amount is smaller than a total loan compared to a single loan (and interests are based on loan amounts, so a smaller loan amount means less good).
The process will be like getting a single mortgage when you buy a land and house package, as you usually get the land and construction bundled together. Even if you give up some of the interest benefits of separate loans, it may be much simpler and better suited for first-time homebuyers. To determine which is right for you, you should speak to an experienced financial professional.
The House and Land Packages Hidden Costs
What you need to know is:
– Legal Fees (Settlement Fees)
– Stamp Duty (for those not exempt from First Home Buyer Stamp Duty)
– Items expressly excluded from the HouseandLand package (including painting, flooring, landscaping, window coverings, skirting boards, and washing line)
– An installation fee (generally between $50 – $300 for gas, electricity, and telephone)
Additional costs for items that may exceed the contract are provided in the agreement; however, they are usually not. Then again, you can’t count on it. For example, a budget for $10k might go over, but the site work is budgeted.
First home buyers grants (FHOG) can be used for turnkey construction projects but not for acquiring vacant land.
Your grant will not be transferred to the contractor until the first payment is made.
You will receive the grant when you make the first drawdown to the builder when you choose a house and land package.
Land loans cannot get advanced until the builder has started construction if a house and land package loan is applied as one application.
Your application may fall through, resulting in stress from having to resubmit it at the last minute.
Siteworks and inclusions
During constructing a house, the loan is ‘drawn down’ in five or six stages. By this, you will be charged interest on the amount of money you have paid thus far. The bank will pay your builder in increments at the end of each construction phase. Each builder may offer slightly different ‘progress payments. We employ six different schedules of progress payments at Plantation Homes, for instance:
- A deposit of 3% (minus your initial deposits) will be required.
- The base rate is 17%
- Framing – 20%
- A 25% lockup is required
- Readjustment of 20%
- Complimentary 15% (in addition to variations)
If you wish to move to the following stages, you should get your loan pre-approved to know what amount you can spend on a house and land package. By knowing your price range, you can search within it with confidence. Make sure you have an extra budget on hand in case unforeseeable costs or upgrades occur.
House and land packages: what to know before you buy
In the case of a house and land package, the property you are buying is generally part of a ‘land estate’. Among these estates are:
- The subdivision would consist of around 10-20 blocks of land in an established area.
- Generally speaking, a medium-sized subdivision consists of about 100 blocks of land (a former farm) and
- Large development projects consist of thousands of blocks of land, which usually include parks, schools, shopping centers, and communities.
As a minor subdivision is usually in a well-established suburb, the amenities are already there. These would be a vital component of a master-planned community, so everyone knows what extras are available and where. Typically, these amenities are not offered at a midrange subdivision, so you will have to conduct more research to ensure near schools, transportation, or retail.
While you might need to wait until all amenities are complete in a master-planned community, the pricing will probably be less if you buy early. On the other hand, waiting until everything is finished or nearly done may result in price increases, but you will not have to worry until things are done.
Things to consider when buying a house and land package
You are likely to feel the desire to move into a display home as soon as you step out.
After the home is built, however, the reality can be quite different, and you may find yourself standing in a house that bears little resemblance to the dreams of luxury and sophistication you had.
Let’s examine the essential factors to consider when buying a home and land package to avoid disappointment.
Transparency – Cost considerations
There is often a fear of hidden or unforeseen costs among new home buyers when purchasing house and land packages. The following are some of these unexpected costs:
- Costs associated with a site
- Duty of stamps
- Extras not revealed
The building process can be made more enjoyable with the help of a trustworthy builder who values transparency in pricing & costing.
Taking an inclusive stance
In choosing their home’s design and features, some buyers have difficulty identifying what they ‘need’ and what they ‘want’.
Using a collaborative builder can circumvent these issues by:
- The inclusion of many features in a high-quality product
- Can be assessed by our team to determine the best home design for you based on:
- Personal Style
We consider what other builders consider luxury as standard features at Metro Homes. As a family-owned property business, we are passionate about giving you the ability to plan and build a house you will love.
Adaptability in design
Nobody wants a house that looks as if it were put together on a production line. An exterior and interior style that reflects your individuality is paramount.
As a result, you need to add your personal touches and have a contractor who will work with you to personalize your home.
Several modes get used to achieve this goal, including:
Locations: A Word of Advice
Infrastructure is the critical factor to consider when considering a house and land package.
There are typically few or no amenities in fringe suburbs where house and land packages were situated in the past.
You need the services an established suburb can offer, whether you’re a commuter or a young family looking for schools. Provide basic amenities, such as:
- Facilities for shopping
- Colleges and universities
- Public transportation
Since demand for quality living and premium locations continues to rise, finding established suburbs with development potential. The Australian Bureau of Statistics ranks some of Metro Homes’ suburbs as some of Sydney’s most affluent.