Buying a House and Land Package? Here’s How To Finance It

House and land packages are one of the most convenient and affordable ways to get a foothold on the property ladder. Unlike buying an established home though, the process of securing finance when buying a house and land package is slightly different. With this in mind, we’ve set out some key points to help you understand just how it all works and what you’ll need to provide to your lender…

finance for buying a house and land package

LET’S BREAK DOWN THE PROCESS

– Buying a house and land package requires securing two loans – one for the house and one for the land. While, as with any mortgage, a deposit and borrowing power are essential, the lender will also need a valuation on the land and home structure in order to assess risk.

– It’s important to remember that the best way to maximise your chances of obtaining finance when buying a house and land package – especially if you don’t have the required deposit – is to use a broker. The key advantage of using a broker is that they are able to source a lender who understands your situation and is willing to provide a loan that suits your needs accordingly.

– The house and land process usually begins by settling on the land first and registering a mortgage on the title. Building commences when the second loan for construction is approved, with payments normally drawn down in stages (meaning you only pay interest on the money as it is used!). You will be required to approve invoices and costs provided by the home-builder before any payments are made by the lender. Upon completion of construction, there will be no remaining payments due from your lender and the full mortgage will now apply.

– In order to meet the terms of your financing agreement, you will often be required to build on the land within one to two years. Speak to your broker and solicitor to ensure you are fully informed of your loan obligations and the building timelines specified within the contracts.

house and land

CONSIDER A DEPOSIT BOND

If you are unable to provide the full deposit amount upfront when applying for finance, it may be worthwhile to consider a deposit bond. A deposit bond acts as a provisional substitute, allowing you to buy into a house and land package even if you do not yet have the necessary funds. It’s important to note that a deposit bond does not replace a deposit, as you will eventually need to pay.

You’ll need to provide your lender with the following:

  • Quote or building contract, including the drawdown schedule recommended by the home-builder.
  • Builder’s details, including licence and insurance: Always check that your project is covered under Home Warranty Insurance (HWI) or your state’s equivalent.
  • Council approved plans: Drawings of the approved proposed works are required for the bank to ascertain the completed value of your property.
  • Quotes for any other planned works: Provide quotes for any landscaping, sheds, pools or other work that will not be completed by the home-builder.

Thinking of buying a house and land package? On iBuildNew you can shortlist and compare house and land packages and also land estates side-by-side! Explore our developers and builders page to find out important information about guidelines, masterplans and where to find display homes. Book a call with our team of experts or call 1800 124 284 to get started today!

If you’re having trouble financing, download our FREE guide to get a comprehensive overview of what you should expect and prepare for…

Kaylah Chesson

Kaylah is completing her final year of a Bachelor of Arts / Bachelor of Laws degree at Deakin University. Her particular areas of interest include property and land law, home design and the creative arts.

About

iBuildNew is the market leading aggregator dedicated to residential home construction and land development. As an independent platform, iBuildNew helps Australians identify and compare new home designs, house and land packages and land estates. It’s the smart way home buyers, who are considering a new build, can find the ideal options to match their individual needs. Home building is a big decision, we make sure you get it right.

You may also like

Jun 24, 2019

Different Types Of Home Loans And Choosing The Right...

Securing a home loan isn’t really the daunting task it’s made out to be. While a strong...
Read More
Jul 23, 2019

10 Essential Questions To Ask Your Mortgage Broker

When you're in the market for a new mortgage, acquiring a home loan can be a complicate...
Read More
Jul 24, 2019

Smart Wealth Building with Home Equity 

While homeownership may seem to come hand-in-hand with a mountain of debt, establishing...
Read More
Aug 01, 2019

Breaking Down Your Questions About Construction Loans

When building a house, you will definitely come across and be offered construction loan...
Read More
Jul 10, 2019

Tips To Prevent Homebuyer’s Remorse

The journey to buying a house is an exciting, emotional experience that will surely lea...
Read More
Jun 26, 2019

First Home Buyers: Here’s How Long It Takes To...

Saving can be challenging at the best of times, but saving for a first home deposit can...
Read More
Aug 01, 2019

Cost Saving Tips When Building A New Home

When starting your exciting journey to building a new home, constantly adhering to your...
Read More
Jul 09, 2019

5 Hidden Costs That Shock First-Time Homebuyers 

It’s no secret that buying a home is a huge financial investment. In fact, it’s usually...
Read More
Jul 24, 2019

Learning The Language For First Time Buyers

When purchasing property, especially for the first-time buyers, it is easy to be overwh...
Read More
Jul 31, 2019

5 Tips on Downsizing Without Sacrificing Style 

Whether it be as you approach retirement or as you seek a simpler, less expensive way o...
Read More

Get more from

Browse House and Land Packages