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How Much Deposit do I Need for a House and Land Package? - House of Home | Furniture
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How Much Deposit do I Need for a House and Land Package?

Are you looking into the idea of a new home? Most people dream of buying a home and making it their own. Most often people purchase a used home and renovate it to suit their personal tastes. Some people decide that they want to purchase land and build their own home while others purchase a house and land package and have a home built for them. If you are considering the purchase of a house and land package, you will need to have a deposit to seal the deal.

Who are House and Land Packages for?

  Since house and land packages have a large market, anyone who would like a new home would be advised to consider these. Whether you are a first-time home buyer or have a growing family and are looking for your second or third home, house and land packages are a great choice.  

House and Land Package Purchase Versus Traditional Purchase

  If you want a home quickly then you should purchase a home that has already been built and lived in. If you find a property that is affordable, and you can agree on a price and contract then you could move into your home in as soon as six weeks.   If you purchase a piece of land, then you might have to wait for it to be serviced with electrical and water. You will want to decide on a home design and then find a builder who fits into your budget. You then must agree on a build price and wait for completion. After you move in you still need to complete the landscaping and this can take several years from start to finish.   A house and land package can have your build completed in four to five months if you do not ask for anything to be varied or changed after contracts have been exchanged. The process is faster than a custom-built home and can result in a savings since many homes are built at the same time in the same location.  

The Price of the House and Land Package

  The house and land package can be obtained for a lower price because many new housing estates are in areas which are located outside of densely populated centres and can be less costly than traditional homes. If you can purchase a new home for a lower cost than a used one, why wouldn’t you choose a new home? The time between your purchase (deposit) and the time that the full amount is due is longer so you can spend that time getting finances together.  

How Does Financing Work with House and Land Packages?

  Financing for a house and land package is usually completed in two stages. There are often two contracts with two loans attached to them, but the loans can be bundled by the lender. The purchase loan is a home loan and then the loan to build the home is a construction loan. These loans paid out in progress payments upon completion of each stage. This means that you will only pay in interest on the amounts that have been advanced at each stage instead of having to pay the entire amount at the outset.   Lenders understand house and land packages, and this makes it easier for those who need a loan to get one. It is easier than trying to obtain two individual loans to purchase the land and then build a home.  

So How Much Deposit is Required?

  You will be dealing with similar deposit rules to those you follow when you are applying for a home loan. You will need at least a 20% deposit to avoid having to pay mortgage insurance through the lender without a loan guarantor. This deposit amount is a percentage of the total value of the house and land after the home has been built.  

How to Purchase Your House and Land Package

 
  1. Research what areas near you are being developed by property developers.
  2. If you can, get contact information for people who have purchased packages from the developer you plan to purchase from. Find out if they are satisfied with their purchase.
  3. Once you decide on a location and a builder, check out their display homes.
  4. Obtain pre-approval on your financing.
  5. Choose your home design and any customizations.
  6. Select your parcel have a clear understanding on what is included with your purchase from interior finishing to exterior landscaping.
  7. Know what the price is to completion and the timeline for the build.
  8. Sign and exchange contracts and have them checked over by a competent solicitor.
  9. Show up at the construction on a regular basis to spot any potential problems.
  10. As the build proceeds ensure that payments are released to the builder but only when you are satisfied that a stage is completed.
  11. Carry out your detailed inspection of the project upon completion and before you release the final payment to the builder.
  If you are a first-time home buyer, you may be eligible for a first-time home buyer grant. Check in with your lender to see what is available to you and once you have your pre-approved funds, it is time to start shopping around for the location where you see yourself living.