Are you purchasing your first home or investment property? You may very well be beginning to experience a sense of overwhelm with the multitude of options available. One popular option is to purchase a comprehensive house and land package. As this is an attractive option for many, here are some considerations to take into account when looking for house and land packages in Victoria.
What Are House And Land Packages?
A house and land package is a property purchase in which the buyer purchases land and plans to construct a home. This is done with one process but with two contracts. These are slightly different from regular property purchases. When you buy a house and land package, you deal with two contracts (one for the land, one for the house), whereas with a traditional property purchase, the two are valued together and you get only one contract.
The land contract is a set value which you will be required to pay via your mortgage or whatever financial terms you’ve arranged. The construction of the home is typically done in phases and paid for accordingly.
Considerations When Buying House and Land Packages
One of the most important considerations before choosing a house and land package is the area’s infrastructure. The area may be considered up-and-coming, so there may be factors to consider such as public transportation that are not fully developed yet.
Break down the prices to ensure they are actually representative of the property value. Sometimes, these can be inflated by marketing commissions and costs. Find packages where you are not overpaying.
If your purpose is investment, take into consideration that you can’t have tenants during the construction phase. So financing your mortgage may require a bit of creativity until you are able to let to tenants, particularly if construction takes longer than anticipated.
House and Land Packages: Pros
Cost-Effective
Purchasing a package deal may be cheaper than purchasing an existing home. There are little-to-no fees or initial payments when building your own.
You can typically settle much sooner with a package deal since the traditional method often employs high interest rates.
Convenience
Going with a house and land package typically simplifies the process of getting a home. You have to deal with the developer only instead of a multitude of different people involved in acquisition and construction.
Financing
Financing is often simpler with house and land packages. You know exactly how much you need to finance before you go to the bank.
House and Land Packages: Cons
Pre-Designed Homes May Not Be For Everyone
While this can be considered a pro as well, not everyone will love to choose a home from a catalogue of options. Still, you can always adjust the design and add or remove any amenities that make the home unique for your family.
Location
If you were hoping to be in the city centre, a house and land package may not be for you. These deals are often situated in the suburbs where the commute to work increases and public transportation may not be an option.
Less Land
As these are generally part of a larger development, house and land packages are usually compact, meaning you’ll have less yard space. That’s not always the case, however, so be sure to do your research beforehand.
In Summary
House and land packages are a great way to purchase property. It’s feasible, straightforward, and economical. It’s particularly well-suited to first-time homeowners. However, if unique home design and amenities are a priority for you, along with a large yard, you may consider purchasing an existing home or creating your own.