Buying a block of land and building later

Buying a block of land and building a house later provides an exciting opportunity to construct a home that perfectly reflects your tastes, preferences, and lifestyle. This option can also provide savings on stamp duty as you’ll pay duty on the value of vacant land only, which is likely to be far less than for a completed house and land package. In the current conditions with many uncertainties related to builders going under in Australia, option to purchase a block of land with the intention to hold until things settle down proves to be a strategy many buyers are looking to adopt.

On the one hand, buying land first and building later provides more time to save funds for your home’s construction. However, if you are currently renting, it can be a financial juggle to cover rent payments while also managing the repayments on a land loan. Furthermore, it is important to be aware of design restrictions in place for master-planned estates to ensure that your home design complies with the overall look and feel of the estate.

Main Differences between Buying a Vacant Block of Developed Land from a Developer vs Buying Off the Plan or Buying Land and Constructing:

Buying a vacant block of developed land from a developer means that the land is already subdivided, and the required infrastructure such as water, power, and sewage are already in place. This can save time and money, but it can also mean that the available lots are limited in size and design. With many advantages to come which we highlight below in this article.

Buying off the plan involves purchasing a property before it is built, which allows you to secure the property at a fixed price before the property market appreciates. This option can be risky, as there is no guarantee that the final product will meet your expectations.

Finally, buying land and constructing involves purchasing an a block of land and building a house on it. This option allows you to have complete control over the design of the house and the use of the land.

Main Benefits from a Finance Perspective of Buying a Vacant Block of Land to Build Later:

Buying a vacant block of land to build later provides several finance benefits.

• Firstly, it allows you to get into the property market now, rather than waiting until you have saved enough money to buy a completed house and land package.
• Secondly, buying land first can provide more time to save funds for your home’s construction. This is particularly advantageous if you are buying in an area where property prices are expected to rise.
• Thirdly, loan serviceability assessment is generally easier for vacant land than for a completed house and land package, as the loan amount is based on the value of the land only. This can result in a lower monthly repayment, which can help with cash flow.
• Potential increase in the future value - One of the advantages of buying a block of land and building later is the potential ability to access equity to fund the construction of the house at a later date when the land value appreciate.

What to Look Out For:

• When buying a block of land to build later, it is important to be aware of the long-term commitment. You will need to pay the land mortgage as well as for your existing living arrangements, which can be financially challenging.
• The number of lender options may also be limited, but it is by no means impossible to find a lender depending on the overall situation.
• Additionally, it is important to carefully consider the contract terms (Contract of sale) for any design restrictions and time frames in place.

In conclusion buying a block of land and building later can be an option that could very much help buyers to get a foot in the door.