If you’re looking to build your dream home you may not know which way to go. So we’ve put together some information that should help with your decision.

You’ve probably seen the advertisements for house and land packages at very affordable prices. These deals are normally offered by big developers who buy up large tracts of land, add the necessary infrastructure like roads and utilities, and then release individual lots to the market as either a completed house and land package or vacant land for buyers to build on.

No matter whether you opt for the complete package or settle for vacant land, the big plus is that at some stage you’ll have a sparkling new home. But there are pros and cons to consider with both strategies.

House and land packages – what you see is what you get

House and land packages can offer a ‘turn key’ deal with all the bells and whistles including fully landscaped gardens, driveways, paths and clothes line, while interiors are painted and floor coverings like carpets and tiles are in place.

In addition, you know exactly what you’re buying. You can see whether the dining room is large enough to accommodate your furniture, and you know exactly what the bedroom windows look out onto. It takes the guesswork out of how your home will look and feel, so when you take possession of the property you can dive straight into the business of settling into your new home and exploring the neighbourhood.

A lender may also be more comfortable with assessing your loan application with a house and land package as they know exactly what the cost will be, and it takes away the risk of cost overruns.

Modifications can be costly

Along with the benefits, there can be downsides to buying a completed house and land package. If you want to make significant improvements like, say, adding a backyard swimming pool, it can be expensive to accommodate major changes to a completed dwelling.

You may also have limited opportunities to customise your home to your preferences. Minor issues like changing the interior paint colour are relatively easy to sort out. However, re-tiling the bathroom to suit your taste can add to the cost of your home, and if there is a large number of items you’d like to change, it can pay to think about option number two – buying a block of land and building when you’re ready.

Buy the land. Build later

Plenty of new estates feature vacant lots for sale, or you may come across an in-fill site in a more established suburb. Either way, buying land first with a view to building later provides the opportunity to construct a home that accurately 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.

On one hand, buying land first and building later provides more time to save funds for your home’s construction though if you are currently renting a home it can be a financial squeeze to juggle rent payments while also managing the repayments on a land loan.

Be aware too, master-planned estates often have design restrictions in place to help create a cohesive overall impression. It can mean you are restricted to a choice of builders and designs, and while minor modifications in key home designs may be fine, anything that’s wildly out of sync with the overall look and feel of the estate may not pass muster.

Another potential factor depending on your circumstances is how a lender will assess your loan application if you’re just buying land to start with. Most lenders have higher restrictions and lower lending limits for vacant land security.

Potential stamp duty savings

On the plus side, a number of state/territory governments offer incentives to new home builders and buyers typically in the form of stamp duty concessions. Your LJ Hooker Home Loans lending specialist can let you know whether these are available for your circumstances.

This is also a good opportunity to discuss loan finance. A traditional mortgage may be suitable if you buy a home and land package but if you’re building a home from scratch, a loan for the land and separate construction loan is likely to be better suited to your needs. Your LJ Hooker Home Loans lending specialist can help here too, with expert advice on the loan finance that works best for your needs.

All up, building your dream or first home may not be as hard as you think! And the state and federal incentives currently on offer may help you take that first step if you’re a first home buyer.

LJ Hooker Home Loans offers low deposit home loans that are also available as home building loans.

Our lending specialists are available 7 days a week for a phone, web, or face to face chat.

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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. You should always undertake your own independent property research.