Financing Tips for Your House & Land Package

House and land packages are a great option for Aussies wanting to build a new home without the hassle of juggling different contracts and timelines.

They offer good value and flexibility, letting you pick a block of land and a home design that fits your lifestyle — all in one simple process. 

But if it's your first time, organising the finances can feel all the more challenging.

From pre-approved right through to settlement, this guide will walk you through the principles of house and land finance so you know what to expect and how to make the whole process simple and stress-free.

How Much Deposit is Required for a House and Land Package

Most house and land packages require a deposit ranging from 5% to 10% of the overall cost. Usually, this deposit is split into two: one for the build and one for the land. That means you will pay a deposit for the land upfront, then another when you sign a building contract with the developer or builder.

While some lenders would accept a 5% deposit (particularly if you’re a first-home buyer), having 10% or more increases your chances of approval and reduces the need for Lenders Mortgage Insurance (LMI). Lenders will also look at your credit record, income and loan limit capacity. 

Tips for Financing a House and Land Package

Financing a house and land package is a little different from buying an existing home. By understanding how the process works and planning ahead, you’ll be better positioned to secure the right loan, avoid unexpected costs and make the most of available support.

Here are some essential tips to help you with your house and land package finance:

Choose a fixed-price contract

Going for a fixed-price building contract can help you dodge surprise costs. Some builders offer ‘turnkey’ deals that cover everything from flooring and appliances to driveways and landscaping. This makes your loan application simpler and budgeting easier.

Consider construction loans

Many lenders offer construction loans made for house and land packages. These let you draw funds in stages as the build moves along. It helps with interest costs and makes sure your builder gets paid on time. Be sure to shop around, as rates and terms can differ.

Compare lenders

Interest rates, loan terms and conditions can be quite different. Don’t just look at the headline rate — check the comparison rates, how progress payments are handled, if interest-only payments are available during construction, and whether the lender knows about dual-contract builds. A mortgage broker can also guide you through your options, help you get a better deal, and find a loan that fits your budget and timeline.
 

Take advantage of house and land grants

Government incentives like stamp duty discounts or the First Home Owner Grant (FHOG) can really help to reduce your initial expenses, so it’s worth checking what house and land package grant is available to you. Even a $10,000 grant can make a big difference when it comes to covering your deposit or building extras.

Know your loan-to-value ratio (LVR)

Your LVR shows your borrowing relative to the value of the property. Maintaining it under 80% will increase your chances of loan approval and help you avoid paying LMI. Saving a larger deposit will also help your LVR and total loan cost be lower.

Understand how progress payments can affect your loan structure

Construction loans are paid in stages known as progress payments. To improve cash flow, you only pay interest on the currently drawn amount. It’s crucial to keep track of each stage and when payments are due, as delays or changes can affect your budget and loan.

Ask about interest-only payments during construction

Many lenders let you pay interest only during the build, relieving some of the financial burden. With this option, you’ll only pay interest on the amount drawn down at each stage.

Check what’s included and what’s not

Not all packages cover the same things. Always find out what’s covered in the base price and what costs extra. This keeps your lender updated on the entire build cost, and it helps you to avoid going over your budget.

Get pre-approved early

Before you sign anything, get pre-approved by a lender. This shows you how much you can borrow and speeds things up when buying land or starting construction. It also shows sellers and developers you’re serious about building your new home.

Remember extra costs

Besides your deposit and loan repayments, there are other costs like legal fees, loan setup fees, site prep, landscaping and inspections after the build. These can add up fast, so have a buffer in your budget for the unexpected.

Keep track of your progress payment schedule

Keep an eye on your builder’s payment schedule since it affects when your loan funds are released. Knowing what’s due at each stage — like slab, frame, lock-up — helps you manage your cash flow and avoid delays with your lender.

Stay loan-ready throughout

While your loan is being processed, don’t make major financial changes like changing jobs, taking out new loans or making large purchases. If you do, your lender might reassess your eligibility before giving final approval.

Use a broker or financial adviser

Dealing with dual contracts and special loan setups can be tricky, which is another great reason to use a mortgage broker or financial advisor. They can help you compare lenders and set up a loan that fits both the land and construction stages.

Stay organised and keep in touch with your builder

Keep on top of your communications, approvals and contracts. Frequent meetings with your builder help to prevent delays and ensure that everyone is on the same page with regard to payments and deadlines.

Secure a House and Land Package Without Breaking The Bank With Eden Brae

Whether it's your first home or you’re looking to knock down and rebuild, understanding the key factors around house and land finance can make all the difference. Start here with our Beginner’s Guide to Financing Your Home — everything you need to know to take the first step with confidence.