What are the advantages of buying land and building?
Done right, with expert loan advice, buying land and building can have huge benefits. For a start, you get to live in a home that’s purpose built to your needs, in an area you love. You also get to enjoy the lovely, brand newness of your home without ‘wear and tear’ from previous dwellers.
Buying land and building also brings financial advantages:
When it comes to buying land and building your home, knowledge is power!
Arm yourself with the facts and do your homework to find out which approach suits you best. That way you’ll avoid surprises and unnecessary stress along the way.
Living in area you love is one of the huge benefits of buying land and then building. At first glance, you may be attracted to proximity to the beach or a beautiful view. Consider the following to ensure you make the best purchase decision:
Services – what services will you need now and in the future? Check if the area has adequate child care, schools, medical services, shopping and public transport. If you’re buying in a brand new area, find out when these essential services will become available? Access are there roads going in and out?
Zoning – what type of constructions are allowed in the area? Is it a general residential zone, or will there be higher density or large lot residential constructions down the track? It’s important to check zoning because the general personality of the area may change significantly in the future. It’s also important to be clear on the zoning restrictions if you’re looking to increase the value of your assets by sub-dividing or building a granny flat. Could your current view be built out by high rise buildings?
Apart from the size of the block, its important to consider the terrain of the block:
Stamp duty is payable on the land’s purchase price. In this scenario, your builder starts construction when settlement has taken place and the land is in your name.
Try to arrange for settlement to happen at the same time as building plans are appoved by council. This will help minimize your borrowing costs.
You pay stamp duty on the full purchase price of your land and house, as well as the following costs:
Typically, most state governments tend to subsidise those buyers buying a new home over an established one. In NSW the $7,000 First Home Owner Grant was discontinued in 2012, and there is now a $10,000 First Home Owner Grant for new homes available.
If you’re not a first time buyer, you can still get a $5,000 grant for new homes – which means even if, for example, you’re after self-employed home loans for your second property, you can still benefit.
Similarly, in Queensland, the $15,000 Great Start Grant helps those buying or building a brand new home, while the Australian Capital Territory only targets new or renovated properties with its $12,500 grant.
For more information about First Home Owners Grant and the New Homes Grant in NSW, visit osr.nsw.gov.au.