Buying a new home is a big decision for anyone. For many, buying land and building a brand new home might seem like a complicated process, but it’s important to weigh up the advantages when comparing new and established property.
So, if you’re tossing up whether to buy land, here are some things you should know:
Have more time to save
You can often pay less upfront to secure a block of land at a new estate, compared to established property in the same area. Developers generally ask for anything between 5-10% of the purchase price down as a deposit on new land, giving you time to save before settlement which could be anywhere from one month to two years away. Compare the construction timeframes between estates and stages to find a block that suits your savings schedule. Paying a deposit upfront secures your block and locks in pricing until it has been constructed. Don’t forget: your lender may require you to contribute more than the developer’s land deposit amount to secure your finance so do your homework to understand exactly what will be required of you to settle on your purchase.
A hands-off way to invest
Want to invest in property but don’t want the headaches that come with tenants and rentals right now? Securing a block of land early might be a good choice, purely for the fact that you don’t need to do anything with it to potentially benefit from capital growth. While a block under construction won’t earn you any rental income, the upfront deposit to secure a block can be significantly less than buying a house, which means you can start investing much sooner. Most developers will require you to commence building a home on your block within 12-24 months from settlement but if you secure a block in early stages with longer title timeframes this may result in a period of up to 3 years from the time you put your deposit down before you need to start building.
Build your dream home — literally
Been to a million open for inspections and have not found the one? Many Australians choose to build new because they get to pick and customise the perfect home for their needs. Not only can a house and land package in a new estate potentially cost less, but you also get to be the boss of how it looks from start to finish. A brand new home is often also equipped by leading builders with the newest inclusions, such as high-quality kitchen amenities and heating/cooling features, meaning you don’t need to think about upgrading the little things any time soon.
Get a helping hand by taking advantage of FHB initiatives
First-home buyers have some a few supporting options up their sleeves.
Firstly, if you’re in Victoria, if you buy under the required price threshold, you could potentially:
- Receive up to $20,000 with the First Home Buyers Grant when you build a new home
- Be exempt from paying stamp-duty or get stamp-duty concession (applies to both new and established property)
For the rest of Australia, there are other options to help first-home buyers get in the market. Victorians can take a look at these options to further improve their financial position when building new:
- The First Home Super Saver Scheme, which allows you to save up to $30,000 of your pre-tax earnings in your superannuation for a deposit
- The First Home Loan Deposit Scheme, where the government will subsidise your deposit to get it to 20%, helping you avoid paying LMI on top of your mortgage
Remember, to qualify as a ‘First Home Buyer’ you need to live in the property for 12 months.
Ready to look at securing your own block in a new estate? Give us a call today to discuss your options – 0499 123 119
Jinding Developments does not guarantee the accuracy of the information in this article and advise all purchasers to always conduct their own due diligence when purchasing property.