Stage 2: Buying your block of land.
Now let’s get started with your land.
Firstly:
Questions to ask the agent or seller (vendor) when you view the land (to let your broker know):
- What is the zoning on the land?
- Are the titles issued yet? If not, when will they be.
- And you want to get a copy of the title so you can discuss this with a potential builder.
- You also want to ask the agent to email you a copy of the contract.
Secondly:
- Never sign anything without a solicitor or conveyancer looking over the contract for you … their job and ours is to protect you and this is how you protect yourself.
- Let your broker know if the title has been issued on the land yet? If not then we’d recommend you get your contract subject to finance AFTER the issue of title as some lenders won’t confirm unconditionally until titles are issued.(If you can’t get this approved by the seller, let us know as we have some lenders for whom getting title issued can be done after approval).
- Please forward your contract (before you sign but after your conveyancer has looked over it) and all the information in the first section to your broker so they can check out your finance clause for you and give you any pointers.
Thirdly:
There is no point buying a block of land you cannot build upon!
I’m going to repeat it so that there’s no mistaking this point.
There is no point buying a block of land you cannot build upon!
So…
- Before you buy your block it’s best to chat with a couple of builders to see if they foresee any issues building what you want on your block, also to get a (rough) estimate of cost. Typically your architect / builder will go out and walk over your site prior to commenting on this where possible. Please print out the pdf here and discuss these points (and more!) with your builder.
- The slope, vegetation, easements, covenants, services to the site all impact on what you can build and the cost.
- Be sure you’ve taken your solicitor/conveyancer’s advice about a soil test and the importance of getting this done.
- Check the zoning with council if you’re not 100% sure it’s residential.
- Rural resources blocks are not advisable – see here
- If title is issued make your finance within 21 days, if titles are NOT issued make your finance 21 days after issue of title.
- Do not make an offer on land without talking to a builder about cost estimates / potential difficulties.
- There are no first home builder’s incentives just on land (they don’t come in until you do the build).
- Remember there are typically no tax benefits for owning vacant land but you will likely have capital gains if you sell it.
- Minimum deposit we’ll want to put down for land will be 10% + costs so roughly 15% of the land purchase price.
- Also … think about what the neighbours are going to be like, can you see them, what are they building, if it’s all vacant land, are there restrictions on what you / they can build?
- Please know that if your block has high voltage overhead powerlines nearby this can pose an issue. Please bring this to the attention of your broker as soon as possible.
- And please read Kirsty’s Home Building Guide – all 5 stages in detail.
- Make good choices….don’t be like blue house.
Finance Wise:
Your broker’s job now is to either apply for indicative finance for the build cost as well as the land (so that as best as possible you know you can build on the home) OR if your deposit isn’t high enough to do that yet, then to give you an estimate of what you need to get to deposit wise to be able to do your build – and to run internal calculations to know that once you have your deposit together, that we have enough capacity income wise to build.
Please note that this is not an exact science … if your incomes change, if bank’s policy changes, if your build costs blow out or your valuation does not stack up then there can be further hurdles. Building is not as straight forward as buying an existing home and as such, you get the perks of brand new and choosing your features, but probably a little more stress along the way.
And lastly when all of the above is confirmed:-
Then you’re ready to sign a contract (subject to finance!).
Not sure what to offer? Read this one: How do I know what to offer?
Up against competition? Have a read here: What to do to stand out in a crowd
Remember, you can keep this to read later if you’re not at this stage, or you can zoom ahead or backwards to the other stages as you need to make this process move at your pace:
Stage 1: Is building right for you?
Stage 2: Buying your block of land
Stage 3: Planning your build
Stage 4: Getting your fixed price building quote and your valuation
Stage 5: Approval for your home loan and progress payments
And as always, please yell out with any questions, I love talking about this stuff (if you hadn’t realised already) and I’d love to help make this process as easy and fun as possible for you!
Happy hunting,
Kirsty
We were excited to go into this project of building the home we would raise our kids in. And after finishing, it was all worth it. Building takes a lot of time in preparation and during the process. It was helpful that due to my work I could drop everything and go to site meetings when needed. I think the most important thing when building is ‘go with your gut decisions.’ It’s your home, make it exactly what you want. Up Loans were absolutely incredible guiding us through the process. We can’t recommend them highly enough. Thank you Up Loans!
Janeand Brett
We are absolutely in love with this stunning Air BnB our clients added in when we worked with them to finance their build.
