How to finance your house and land package
You’re looking to buy a new home, and have decided that a house and land package best suits your needs.
But where to next?
Financing a house and land package is different to your average home loan for an existing property. You’ll need a different type of loan, and you’ll need to take some extra details to your lender. We’ve created this guide to help you navigate the financing process quickly and easily, and help you on your way to buying your house and land package.
Valuation, deposit and mortgage payments
First of all, your mortgage requirements for a house and land package loan will look much the same as you would expect when looking to buy an established home. Your lender will want a valuation of the land, and of the house you plan on building. You’ll need to have a deposit ready, as you would with your average home loan, and you’ll be subject to the same lending criteria, such as being able to service the mortgage.
Mortgage for your land
The differences between financing a house and land package and financing an established home begin to appear at the purchase of your land. First, unless you’re paying in cash, you’ll need a loan to purchase your land. The mortgage on your land works in much the same way as you’d expect with any other mortgage. The land’s title will be issued to you, with a registration of the mortgage on the land. You’ll then need to organise a second loan for the home you’re planning to build.
Mortgage for your home
Once you’ve successfully taken out a mortgage for your land, and the settlement date has passed, you will be able to apply for a loan on the home you’re hoping to build. The type of loan you’re applying for is called a construction loan. This loan allows you to borrow against a home that is not yet built, based on the proposed value of the home.
You can finance your land and construction loans through the same lender, as a part of a package, and you will normally be required to build on the land you’ve purchased within one to two years of obtaining your land.
Generally, the funds for your house build will be ‘drawn down’ over the course of the build. Not only does this protect the lender, it also means that you do not begin paying interest on the entirety of the loan until your build is complete. Depending on your lender, you will generally be issued invoices for each portion of the build, which will then be passed on to your lender, and paid by them, directly to your builder or contractor. You might also find that your bank or financial institution will regularly inspect the build, to ensure that all things are going to plan, and that the money is being spent as expected.
Why buy a house and land package?
At Coral Homes, we tailor house and land packages which not only suit your needs, but help to make financing your build that much easier. Our turnkey solutions mean that once you take possession of your new home, everything you need has been taken care of. From retaining walls, to driveways, air conditioning and even light fittings: your new Coral Homes home is ready for you to move into once you receive the keys.
Furthermore, with a Coral Homes house and land package, you know exactly what to expect in terms of price. Before you even purchase your land, you will know the full cost of your works, and be able to take this information to the bank. Your chosen house and land package will help the bank to offer you a loan, without any hidden surprises. You need not worry that you’ll be left with unfinished lawns, unpaved driveways, or other extra expenses that you hadn’t counted on.
What you’ll need to take to your lender
To make the loan application process as simple as possible, you’ll need to take a few extra pieces of information to your lender. These will include:
- An estimate: Ask your Coral Homes new home consultant for a free estimate for your new home. You can take this to your lender in the first instance to seek finance pre-approval. In certain cases, Coral Homes may be able to provide a fixed price up front before you pay any preliminary fees, which is a great way to streamline the pre-approval process.
- A building contract: Coral Homes will provide you with a fixed price contract for your home build. This will include your chosen home design, facade and inclusions, as well as site works required for your land.
- Progress payment schedule: The building contract will also include a schedule of drawdowns on the loan, to assist your bank or financial institution in planning for your finance.
- Builder’s licence and insurance details: Once your contract is issued, Coral Homes will provide you with the relevant insurance details for your build depending on your state; you’ll need to provide these to your lender before your loan application can go ahead.
- Plans and specifications: You’ll receive the plans and specifications for the build with your contract, all of which you will need to provide your lender so your loan application can be approved.
Coral Homes makes choosing a house and land package straightforward and stress-free. For more information on purchasing your new house and land package from Coral Homes, contact us today.