Comparing your loan options is vital if you’re interested in a house and land package deal, which you can do right here with Savvy.
Fact checked
House and land package deals are designed to make the process of building and buying a brand-new home easier. They are the result of property developers, house builders and sometimes lenders working together to offer a package deal for land purchase, home building and home loan.
However, these bundled home loan finance deals may not always be the best loans available on the market, so it pays to find out what alternatives are available. You can save money by comparing loans here with Savvy to make sure you find the best loan deal to suit your individual needs.
A turnkey package will be a set price and you’ll get to see exactly what you’re buying before you sign up. A house and land package mortgage may only have a set building price for a certain length of time and if building works are delayed, the price may rise.
You’ll probably get very little choice about the fixtures and fittings provided with a turnkey package.
However, with house and land package finance, you get to choose the appliances and taps you like, the light fittings and even the small things like your letterbox.
If you choose a turnkey package, your house will be built and finished on your behalf.
On the other hand, as an owner-builder with a house and land package, you’ll have a far more hands-on involvement at all stages of the building process.
As an owner-builder, you may end up dealing with the property developer, the builder, the site manager, the construction manager, and many more people involved in the building of your home.
A turnkey package will most likely only involve you dealing with your developer, however.
Building your own home can bring its own joy as you customise all aspects of your unique home.
In contrast, a turnkey agreement may see you purchase one of several identical homes in the same housing development.
House and land packages are a type of home loan provided by property developers, builders and lenders. Under this arrangement, they work together to offer land purchase, home building and property finance bundled together into one ‘house and land package’. By agreeing to the package, you get a home loan, your selection of block and a choice between several different sizes and styles of house the builder can construct for you. However, your loan specifics will depend on the type of package you choose, so it’s crucial you fully understand what your options are when it comes to buying land.
Standard house and land packages
In this instance, the property developer, the builder and a lender work together to present new home packages to buyers. You’ll first need to buy a block of land, before working with the builder to either design a unique home or choose a design from a range of homes they can erect on your block.
You’ll take out a second loan to cover the construction of your home, which will be a construction loan, to allow you to be approved for a pre-agreed loan amount at a fixed interest rate, with the borrower able to make progress payments directly to the builder (known as draw-downs). You only pay interest on the money you’ve used until the house is complete. The loan then reverts to a more standard principal and interest loan, with a variable or fixed rate.
Buying a turnkey package
This involves agreeing to buy your house once it’s built (also known as ‘move-in-ready homes’ or ‘complete’ new homes). You’ll buy the house and land together from a developer, rather than having separate loans for each. The phrase ‘turnkey’ means all you have to do is turn the key to open the front door of your brand-new completed home.
Buying a vacant block and building yourself
You may either find a vacant block in an established area or buy one on a new housing development under construction. This option gives you total freedom to build your dream home and can potentially save you a great deal of money, but it's important to note that you’ll have to organise every aspect of the house building and utility connection yourself.
No – you’re under no obligation to use the lender recommended by your builder or developer. It's a good idea to compare with Savvy to check that your lender is offering you the best construction loan around, as you can save a considerable amount by sticking with your preferred lender.
For example, one major builder is offering house and land packages with a loan comparison rate of 4.88% from their partnered lender. However, an almost identical construction loan can be had for a comparison rate of 3.2% from another lender. This big difference in loan comparison rates could save you hundreds of thousands of dollars in interest, as illustrated by the chart below
| Comparison rate of P&I loan | Loan amount | Term of loan | Monthly repayments | Total interest paid over the life of the loan |
|---|---|---|---|---|
|
4.88% |
$600,000 |
30 years |
$3,178 |
$543,746 |
|
3.20% |
$600,000 |
30 years |
$2,595 |
$334,129 |
You don't have to pay a cent to compare home loans with us, enabling you to do so at any time.
You can fill out a simple online quote via our form without having to worry about sorting through heaps of paperwork.
With a panel of reputable mortgage lenders behind us, you can rest assured you'll be comparing high-quality options.
Do plenty of background research to ensure your property developer has a good reputation and has completed successful projects previously. If you can, visit previous housing developments to get an idea of how your neighbourhood might look when complete.
Ask in the nearest library or council chambers to find out what the land had previously been used for. Check there’s no possibility of soil pollution or groundwater contamination in the location, as such issues can be expensive to remedy.
Public transport may be an important issue either for you now or your children or house resale value into the future. Make sure the new housing development is connected by public transport and that bus routes are planned for your neighbourhood.
Whichever type of house and land package mortgage you choose, make sure you read your contract carefully and ask for clarification if you don’t understand anything. Pay attention to all the fine print and exclusions, as these can be significant.
You must be aware of exactly what you’re getting when you sign your house and land package contract. Check for inclusions like carpets, window blinds, a dishwasher, a clothesline, landscaping and paving. Leave a buffer in your home budget for unexpected extras which may be needed.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
