"Buying a House & Land Package can save you a considerable amount in stamp duty and your entitlement to the First Home Owner's Grant will increase."

New Home Purchase Options

This is generally a home design that is matched to suitable land and promoted as a Home & Land Package. Sometimes site costs considerations have been estimated up front to give an indication of these costs or "Fixed” into the total price. This is designed to reduce uncertainty in the buying process. The concept of a “Package” is generally to drive additional incentives and value to the homebuyer compared to buying the land and home independently of each other. Each "Package” is different and some will include carpet, tiles, fly screens, landscaping etc, which makes the whole process much easier up front and can save costs, whilst others are simply the standard home and land prices put together, plus the site costs are ascertained later.

The term "House & Land” package is often used loosely. In an ideal world every Home & Land Package promoted would include fixed price site costs completely checked against developer guidelines and council requirements, etc. In reality this is very difficult with so many homes that could potentially be packaged onto so many blocks of land.

Not every Estate will allow you to create Home & Land Packages. Some Land Developers are not including this function, although you can ask them to consider it or talk to the builder directly.

In many cases, purchasing a Home & Land package, will involve speaking with both the builder and land developer. It is important you sit with the builder to clarify all costs associated with the package and ensure the home does match the land. Considerations such as Res Code requirements, all developer covenants, sitting considerations will need to be considered at this point.

It is likely you will need to pay the Land Developer a deposit for the Land and the builder is paid a deposit for the Home component. Whilst some preplanned packages will require one deposit for the Home & Land. You will need to enquire to find out the requirements for each.

Master Planned Housing

This Home Buying option is very popular overseas and makes sense for a number of reasons and is becoming more prevalent in Australia . It involves a Builder or Land Developer building multiple homes in a concentrated area, i.e. a street or even an entire estate of homes. Unlike usual estates where you buy land and find a suitable home to build, this option allows you to choose a pre confirmed Home design that will be built on a specific block.

Depending on the Master Planned Development these homes are sometimes sold “Off the Plan” i.e. prior to construction, or alternatively they will be sold to homebuyers whilst they are being built or have been finished. The key difference between “Master Planned Housing” and a typical “Home & Land Package” is that there are multiple homes to choose from in the one location which will be built regardless of whether they have been sold in advance or not. The homes are predetermined for that block of land.

In an ideal Master Planned Development, consideration has been given during the planning stages to ensure that the homes within the development complement each other and that the streetscape looks good. It is these things that will impact the future resale value and enjoyment whilst living in the home and the area.

Purchasing within “Master Planned Developments” can sometimes also alleviate the need to wait for the home to be built. Another advantage is that generally you only pay an initial deposit when you purchase and only need to pay the balance upon completion. This is a different process than going through the process of choosing a block and then choosing a home to build, where you are generally required to pay a deposit on the land, then pay the balance when the land is title released (when you can build on the land) and paying progress payments for the home during construction.

Purchase Land then Find a New Home Design/Builder

Purchase a block of land and then choose a suitable home to build. Sometimes people do it this way if they are intending on holding the land for a period of time before they construct their home. It is wise to consider the type of home you think you want before buying land. .i.e. a big single story home will require a particular size block of land compared to a narrow double story which will not require as much ground area. Consider showing a few builders the block you are looking at and the type of home you expect to build, as they will be able to give you an indication of whether the Home is suitable for the land.

Unfortunately people underestimate or simply don't understand that some blocks of land are suited to some types of homes. The fact is some blocks only suit certain shaped homes.

Simple things to consider when choosing your land:

• Which side of the block is the driveway located
• Which side of the block the living room windows will face
• Are there any special "Building Envelopes” on the block that limit where the home must be placed on the land
• Where is North in regards to the block. (The sun rises in the East and sets in the West and in winter takes a Northerly aspect)
• What is the width of the Home compared to the Width of the land.
• Do you have any special requirements, in terms of the space you will require at the front or rear of the property
• Do you want a big back yard, i.e. enjoy gardening etc or are you better off with a low maintenance block, but closer to parks and walking paths
• A lot of people extend their garage to allow more room for storage. If you plan do this, will you require a slightly wider block. Also worth asking the Land Developer and builder whether you are able to do this.

This concept of making sure the Home is suitable to the land is very important and generally you should chat to Builders and Land Developers about this before buying.

Making a decision

Think about when you want to move into your new home and ask how long the building process is likely to take with your preferred builders. Also ask the land developer when the land you are considering will be title released, i.e. ready to build on.

Generally people start researching different options and fall in love with a block, home design or home & land package. This is why it can be a good idea to have an understanding of your finances in advance, so you know how much you want to be spending and can afford.

Now is the time to speak to relevant New Home and Land consultants in depth to better understand the price, inclusions, exclusions, process etc. After spending time with consultants and asking relevant questions, you should be confident and excited or recognize that you have additional questions that need answering before you can make a decision.

Remember, you want to make a good decision that is good for you and your family so ask lots of questions so you are confident. This can be a confusing time, so try not to be embarrassed to ask lots of questions.

Payment Requirements

Generally the Land Estate will require an initial deposit to hold the block and then a 10% deposit within a short period to secure the block as yours. At this point you will generally sign the land contract and agree on the date when the balance of money will be paid. This date could be at land title release date or another as agreed.

Just be aware that sometimes land might be title released sooner or later than expected. It is worth considering whether to involve a solicitor or conveyancer at this point to help with the transfer of money and title of the land.

The builder will generally require an initial deposit. When the official costing is presented an additional payment will be required. The Home costing should detail the majority or all of the costs associated with building the Home on the chosen block.

Generally when the housing contract is signed, the balance of a 5% deposit is required, i.e. 5% less the money you have already paid towards the home. You will also have to show unconditional finance approval in writing before construction commences.

Note different builders will use different processes so consult with them. Once the land is Title Released and the building permit is approved, the builder can order the materials and start construction. Generally payments are made at various stages of construction, i.e. Footings, Frame, Lock Up, Fixing & Completion. The percentage of each payment will differ depending on the process being taken. This will all be detailed in the Building contract.

The bank generally handles the progress payments directly with the builder.

How Much Can I Borrow – Home Loans

You should speak to one of our accredited mortgage brokers about this important area early on in the process of looking for your new home. There are numerous things that impact your ability to get a home loan. At this point you might be in a position to get a loan or might be advised that you need to do a few things to prepare for that next stage which might take some time. You are better off knowing this upfront, than paying deposits on homes or land, to later find that you cannot get finance or that you are restricted to certain types of Home Loans that might not suit. It's just a matter of knowing your options upfront.

There are many different finance products available and it's a matter of speaking to one of our accredited mortgage brokers and finding the right one for you. Checking your financial situation can be quite "eye opening". An awareness of what will be required to get your loan approved, gives you a chance to get things in order so you are not disappointed when you find that perfect Home, Land or Package".

Obviously getting a Home Loan is a serious commitment, so be mindful of your plans. i.e. If you are applying for a loan under the circumstances that two people are working but plan for example to have one income shortly for whatever reason, then work out if this will be manageable on one income. We can help you determine if you fit within the scoppe of affordability with different scenarios.

It can be a good idea when saving and preparing for your home loan to practice living with the money you expect to have when you do have the loan. With a budget in mind, now you are in a good position to know what you can afford etc.

Glossary of Terms

Site Costs – Each block of land is unique, some requiring more work to prepare than others depending on the slope of the land, soil conditions etc.

Res Code – Government guidelines regarding a range of topics including Home Sitting on a block, front set backs, wall heights etc.

Covenants – Land Developers use covenants to specify the types of homes and features of New Home designs they require within their estate, i.e. “Require a minimum home size of 150m2.

Home Sitting – The position of a Home on a piece of land.

Off the Plan – Generally this refers to a home that is under construction or complete that can be purchased.

Title Released – Generally when a Title of Land is released in a new subdivision, it means the land has been transferred into the name of the buyer, or it can be purchased and built on straight away, i.e. the roads and surrounding area is at a point where the construction on the block can commence.

If you would like to know more about buying a house & land package in Melbourne you can:

1. Call us during business hours on (03) 9700 7033.