We all know there is an array of lenders on the market offering a huge variety of home loan products, but did you know that financing a house and land build is usually a little different than if you buy an established home?

Whilst you will still require the same checks and balances as with a standard mortgage for an established home, it is the structure of the loan that will differ.

Usually, a lender will provide you two steps to the process of obtaining a mortgage for a house and land package. This two-step process allows for settlement to occur on the land first, with a mortgage registered on the title.

Step 1 You will buy the land with one loan, the mortgage loan that you are most likely familiar with.

Step 2 Then you will build the house with another, known as the Construction loan. Commonly they are bundled together with the same lender.

One of the main benefits of this split loan approach is a Construction loan allows you ‘draw down’ an agreed amount to pay for each stage as your home is built. That way, you only pay interest on the money you’re using at each stage until the home is built.

 

House and Land package finance and affordability.

Nowadays there are many online tools and calculators to help you assess your home loan affordability and borrowing capacity. Don’t forget when calculating your budget to allow funds for costs outside the sticker price of the house and land package, these include Government (stamp duty) Conveyancing and Lender fees and insurance, these of course will vary by which state your land is located, who your lender is and value of your package.

If finance is not your thing there are many Mortgage brokers that are willing to do the hard work for you and walk you through the process of financing your purchase of a house and land package. It’s never been easier to find a local Mortgage broker, but if you are looking for a tried and trusted broker we recommend Glen Polley at Own It Finance.

Getting your finances sorted early on in the process mean’s you can relax and look forward to the next step with confidence  – house and land package shopping!

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