Everything You Need to Know About House and Land Packages

House and land packages give first home buyers in Beaumaris access to a brand new property and often unlock stamp duty concessions and government grants that existing homes don't qualify for.

The structure is straightforward: you purchase vacant land and a building contract in a single transaction, usually in a newer estate or subdivision. For buyers in the Bayside area, this typically means looking beyond the established pockets near the beach and considering fringe locations where developers have released land. The appeal is clear - you get a new home built to modern standards, often with builder incentives, and you may be eligible for support that reduces your upfront costs.

Why House and Land Packages Attract First Home Buyers

House and land packages qualify as new homes, which means they attract Victoria's $10,000 First Home Owner Grant for properties valued up to $750,000. You also pay no stamp duty on new builds valued under $600,000, or reduced duty up to $750,000 if you're an eligible first home buyer. Established homes in Beaumaris don't offer this same level of support.

Consider a buyer approved for a $650,000 house and land package in a nearby growth corridor. They receive the $10,000 FHOG and save thousands more in stamp duty. The land component might be $250,000, with the build costing $400,000. That same buyer looking at an established home in Beaumaris at $650,000 would miss out on the grant entirely and pay full stamp duty, adding over $30,000 to their entry costs.

How the Finance Structure Works for House and Land

You'll need two separate valuations and often two settlements - one for the land and one for the completed build. Most lenders structure this as a single loan with progressive drawdowns. You settle on the land first, then the lender releases funds to the builder at various construction stages, typically five or six progress payments from slab to completion.

Interest during construction is usually charged on the amount drawn down so far, not the full loan. Some buyers pay this monthly from their own funds, while others capitalise it into the loan. Your construction loan structure will depend on your lender's policy and your cash flow during the build.

Using the First Home Guarantee on a House and Land Package

The expanded First Home Guarantee allows eligible buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. This applies to house and land packages, but the property value must fall within the cap, which in Victoria is currently $900,000 for new homes.

A Beaumaris buyer with $45,000 saved could use the scheme to purchase a $900,000 package, provided they meet income and residency requirements. The guarantee covers the lender's risk above 80% equity, so you avoid LMI while still borrowing 95% of the purchase price. There are annual place limits under the scheme, so it's worth confirming availability with a broker when you're ready to proceed.

Deposit Requirements and Using the First Home Super Saver Scheme

Most buyers need at least a 5% deposit to access low deposit options under the First Home Guarantee, though some lenders accept 10% if you're not using the scheme. Your deposit must include genuine savings held for at least three months, though some lenders accept gifted funds from immediate family for part of the deposit.

The First Home Super Saver Scheme lets you save inside your super fund at a concessional tax rate of 15%. You can contribute up to $15,000 per financial year and withdraw up to $50,000 total for your deposit. If you've been salary sacrificing into the scheme for three years, you could have a significant portion of your deposit ready to go, taxed far lower than it would be in a standard savings account.

Choosing Between Fixed and Variable Interest Rates

Your loan doesn't start until you settle on the land, which means you'll be locking in your interest rate around that time, not when you sign the building contract. Many first home buyers split their loan, fixing a portion for rate certainty and keeping the rest variable for flexibility.

A fixed interest rate protects you if rates rise during your build, which could be six to twelve months depending on the builder's schedule. A variable rate gives you access to an offset account, which can be useful once you're making full repayments and want to reduce interest. Some buyers fix 50% to 70% of the loan and leave the rest variable, balancing security with the ability to make extra repayments without penalty.

What Happens During the Construction Period

Once you settle on the land, the builder takes over and works through the construction stages. You'll pay interest only on the amount drawn down, which increases as each progress payment is made. Your lender will typically require a quantity surveyor or building inspector to confirm each stage is complete before releasing the next payment.

In our experience, buyers underestimate the time between land settlement and moving in. If your build takes nine months and you're renting during that time, you're paying rent and construction interest simultaneously. Budgeting for this overlap matters, especially if your rental lease doesn't align neatly with your expected completion date.

Structuring Your Home Loan Application

Your home loan application will need to cover both the land and the build, with the lender assessing your income, expenses, and ability to service the full loan amount. Lenders treat house and land packages differently to established homes because the security doesn't exist yet - you're borrowing against a contract and a block of dirt until the build completes.

Some lenders are more comfortable with certain builders than others. If your builder isn't on a lender's approved list, you may need to provide additional documentation or look at a different lender. Pre-approval helps here, as it confirms your borrowing capacity and lets you move quickly when you find a package that works.

Beaumaris Buyers Looking at Nearby Growth Areas

Beaumaris itself has limited house and land opportunities due to its established nature and proximity to the bay. Most buyers looking at packages consider nearby corridors in Carrum Downs, Cranbourne, or further out in Clyde and Officer, where developers have released land in the past few years.

These areas don't offer the same beach access or established infrastructure as Beaumaris, but they do offer brand new homes, lower entry prices, and access to government support that makes the numbers work for first home buyers. The trade-off is usually a longer commute and a wait for local amenities to develop as the estate matures.

Avoiding Common Mistakes with House and Land Finance

The biggest issue we regularly see is buyers signing a building contract without confirming their finance is unconditional. A pre-approval is not the same as final approval, and lenders will want to see the final land contract and building specifications before they commit. If your builder requires a 5% or 10% deposit upfront and your finance falls through, you risk losing that deposit.

Another common mistake is underestimating the cost of upgrades. The base price advertised for a house and land package rarely includes floor coverings, window treatments, landscaping, or driveway upgrades. These can add $30,000 to $50,000 to the total cost, so factor them into your borrowing capacity from the start.

Frequently Asked Questions