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Low deposit house and land packages

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Low deposits’ and ‘house and land packages’ are hot topics for new homebuyers. While house and land packages are an enticing option for their simplicity and affordability, saving up for a deposit can be a significant hurdle 

Traditionally, a home deposit is 20% of the total property value. Yet these days, this can equate to singles or couples needing to save up a six-figure sum! While it’s wise to have decent savings before you buy a home (the act of putting away money regularly is good practice for when you have a mortgage), achieving a 20% deposit can feel impossible, especially if much of your potential savings is allocated to rent.  


The good news? Low deposit house and land packages are a realistic and exciting option for new homebuyers.  

What does ‘low deposit’ actually mean? 


A low deposit loan refers to a home loan offered to borrowers that have less than a 20% deposit. This doesn’t mean you don’t have to save up any deposit at all. You will likely need at least a 5% deposit to secure a house and land package.  



The appeal of low deposit house and land packages


Low deposit house and land packages can have significant benefits: 

  • Move in sooner: A low deposit means you can fast-track your finance journey and secure a mortgage (and your home ownership dream) sooner! 

  • Stamp duty savings: If you buy a house and land package (rather than an established home), you’ll only pay stamp duty on the land. And if you’re a first homebuyer, you could be eligible for stamp duty concessions in your state.  

  • Good value for money: House and land packages are usually competitively priced! 
  • Location choices: From a bush retreat to a seaside setting, house and land packages are available in a wide range of locations. 

  • Everything is brand new!: Unlike buying an older established home, building new means your maintenance requirements are minimised now and into the future. 

  • It feels like you: Dreaming of earthy tones or silver accents? Building new means you can negotiate your inclusions. Just keep in mind this can alter the overall price. 


Securing your low deposit house and land package: the two biggest steps. 


Acquiring a low deposit house and land package requires two main steps – securing a fair and competitive finance deal, and finding a quality house and land package with great potential for growth. 


Step 1 – Obtaining low deposit finance

Getting your financial ducks in a row is an important first step as it provides those all-important budget parameters. Here are some elements to consider when looking at finance for your low deposit house and land package:


Be realistic with your budget  

As a general rule, it’s ideal that no more than 30% of your wage (after tax) goes to mortgage repayments. Also, keep in mind that your circumstances may change in the future. For example, if you wish to start a family or change career, your household income will likely fluctuate through these life stages. And remember, interest rates will change across the life of your loan too.  


Banks and lenders will want you to pay LMI  for a low deposit loan 

A low deposit loan means that the bank or lender is taking on more financial risk, and they need to mitigate this risk. One way they do this is through Lenders Mortgage Insurance (LMI). If your deposit is less than 20%, you may need to pay LMI, which can cost thousands of dollars.  


How to reduce or avoid LMI Insurance on your low deposit loan 

  • The Home Guarantee Scheme (HGS): The HGS is an Australian Government initiative where the Government essentially guarantees up to 15% of the value of the home loan to facilitate no LMI requirement. Eligibility criteria and other conditions apply.  


  • Get a guarantor: If you don’t qualify for the HGS, you may have a family member or friend who is willing to offer up equity in their home as security for your mortgage to help you avoid paying LMI. Always seek financial advice before entering into any guarantor arrangement. 


  • Boost your deposit through the First Home Owner Grant: If you’re a first homebuyer, you could qualify for a financial grant from your State Government! Grants vary in each state and territory, so check your State Government website for details and eligibility criteria.  


With any purchasing decision, always engage a trusted finance professional who can talk you through all the costs, fees and any legal ramifications of your next steps.  


Step 2 – Choosing your House & Land Package 

Here are six tips to help choose the perfect home design and block for your low deposit house and land package: 


  1. The potential for equity: A low deposit loan can mean you won’t have a lot of equity when you’re starting out. Ideally, your property value will increase over time, which is what creates equity. This equity becomes your bargaining tool into the future, as you look to refinance. So seek out areas with high growth potential. 
  2. Long-term location: Moving is expensive (stamp duty, mortgaging costs, etc), so pick a house and land package in a location where you can see yourself living for quite a while. That way, if staying put for the long-term is the right financial decision, your location can support your family and lifestyle as it evolves.  
  3. Visit display homes: Display homes allow you to see what a particular builder is capable of, as well as what design features appeal to you most. Take photos of features and fixtures that you love to create a mood board. 
  4. Spent time at communities of interest: Pretend you already live at the locations you’re interested in. Walk the streets, visit the parks and chat to your potential new neighbours.  
  5. Find reviews and testimonials: A quality developer will proudly share reviews and testimonials on their website. Hear what some of our residents had to say about buying a house and land package in a Cedar Woods Community.  
  6. Choose the right builder: Do your research in finding the right builder for your new home. This new build journey is both exciting and challenging so putting a bit of extra time into the early stages will help make the process more enjoyable in the long run.

Thinking about a low deposit house and land package? Continue your knowledge journey with these two free eBooks: 


Build your knowledge about house and land packages with our popular House and Land Packages Guide. Discover helpful tips, important facts and advice on taking the next step! 

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Seeking home finance for the first time? It pays to do your research! Find key definitions, explanations and information about government support for first homebuyers in our First Homebuyer Finance Guide. 

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