House and land packages have become an increasingly popular choice for first home buyers in Templestowe and surrounding areas. These packages offer the opportunity to secure both the land and construction of your new home through a single purchase agreement, providing several advantages for those entering the property market.
Understanding House and Land Package Finance
When buying a home through a house and land package, the financing structure differs from purchasing an established property. The loan amount is typically released in stages as construction progresses, which affects your borrowing capacity calculations and the application process.
Most lenders require separate valuations for the land component and the proposed construction. Your financial situation will be assessed based on your ability to service the full loan amount, even though funds are drawn down progressively during the building phase.
First Home Buyer Benefits and Schemes
Templestowe first home buyers can access several government initiatives when purchasing house and land packages:
• First Home Owner Grants (FHOG): Available for new homes, including house and land packages, with grant amounts varying based on location and construction value
• Home Guarantee Scheme: Allows eligible first time home buyer programs participants to purchase with a deposit as low as 5% while avoiding lenders mortgage insurance (LMI)
• Stamp duty concessions: Victorian first time home buyer schemes often include reduced or waived stamp duty for eligible purchases
These benefits can significantly reduce the upfront costs associated with buying your first home.
Interest Rate Options and Loan Features
When applying for a home loan for house and land packages, you'll encounter various interest rate structures:
- Variable interest rate: Fluctuates with market conditions and lender policy changes
- Fixed interest rate: Locked rate for a specified period, providing payment certainty during construction
- Split loans: Combination of fixed and variable portions
Many lenders offer interest rate discounts for new constructions, and packages often include features such as offset account options to help reduce interest payments over time.
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Loan to Value Ratio Considerations
The loan to value ratio (LVR) for house and land packages is calculated on the total package value, including both land and construction costs. Most lenders will finance up to 95% of the total value for first home buyers, though this may require LMI unless you're eligible for government guarantee schemes.
Traj Finance can help you access home loan options from banks and lenders across Australia, ensuring you find suitable terms for your specific package purchase.
The Application Process for House and Land Packages
Applying for a home loan for house and land packages involves several key steps:
• Obtaining pre-approval based on the total package value
• Providing bank statements and financial documentation
• Submitting building contracts and specifications
• Arranging separate land and construction valuations
• Coordinating drawdown schedules with your builder
The streamlined application process through experienced mortgage brokers ensures all documentation requirements are met efficiently.
Construction Loan Features
During the building phase, your loan operates as a construction facility with progressive drawdowns. Interest is typically charged only on funds drawn down, which can result in lower initial repayments compared to a standard home loan.
Once construction is complete and you receive the occupancy certificate, the loan converts to a standard home loan with principal and interest repayments on the full loan amount.
Investment Loan Options
For those considering house and land packages as investment opportunities, investment loan options are available with different criteria and interest rates. Investment loan applications require additional documentation and have different LVR limits, typically up to 90% for new constructions.
Investment properties purchased through house and land packages can provide tax benefits during the construction phase and beyond.
Working with Traj Finance
As experienced mortgage brokers, Traj Finance provides access to banks and lenders nationwide, ensuring Templestowe clients can compare loan products and find suitable financing solutions for their house and land package purchases.
Our team understands the unique requirements of house and land package financing and can guide you through the entire process, from initial pre-approval through to settlement and beyond.
Whether you're buying your first home or considering your first investment property, we'll help you understand your options and make informed decisions about your property purchase.
Call one of our team or book an appointment at a time that works for you to discuss your house and land package financing options and get pre-approved for your home loan.
