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Buying A House & Land (2 Contract) Package versus

Buying an Off-the-Plan House & Land (Single Contract) Package

There are many decisions to make when purchasing your new home – choosing between an 'off the plan' property or buying a land and house package via 2 contracts. This is a high stake, yet thoroughly enjoyable phase of your purchasing journey. Since buying a house is probably one of the most expensive investment decisions most people could ever make, it pays to invest time and resources in doing your research and getting your facts right to make informed decisions.

House & Land - Construction (2 Contracts)

When buying a house and land package, you first select a suitable Home & Land Package. Then you sign the FIRST contract to buy that particular piece of land. When your finance is approved, you then sign a SECOND contract to Build your selected house on your land.

One of the key issues with house and land packages is that it’s being completed and funded in stages. In effect, you could consider two parts to the house and land package financing – you are financed for the land initially (i.e. a regular mortgage), and then you get financed for the house as each stage of the house gets built (i.e. a construction loan).

What this means is that you have incremental loans accumulating on your account with every stage of the house being built, and you’ll need to plan carefully to ensure you have good cash flow.

One of the advantages of purchasing house and land packages through New Property and Finance, is that you have an advertised Fixed-Price, Turnkey Finished Home that serves as a benchmark for you to plan your cash flow, so you would know the budget you have earmarked for purchase and construction and not be faced with any nasty surprises in costly hidden cost blowouts.

House & Land - Off-The-Plan (Single Contract)

When you purchase an off-the-plan house & land property, you only have one contract that encompasses both the house and land component together. Initially, you will pay the 10% deposit, which is held in a trust account. When the builder is ready to proceed with the build, they can take the contract and evidence of your 10% deposit to the bank and request the entire loan amount to begin building.

The reason for this structure is needed is because many properties e.g. townhouses and apartments, share facilities and walls. Progress payments on a building with multiple parties owning different sections would not make sense. This is why the single contract, off-the-plan approach is sometimes necessary as it will be difficult to get funding without a title being issued.

Once the property is complete, the Home & Land Package, the apartment/townhouse owners settle and purchase the property in one day. This means that their mortgage is to the value of the complete purchase amount, rather than progressively increasing throughout the build stages.

The key difference?

When you purchase with house and land (2 contracts), you own the land BEFORE you begin to build the house.

In an off-the-plan house and land (single contract), you own nothing until the end of the process and then you settle in a single day on the whole lot.