So why is it better to buy and build than to purchase a newly completed home? It is true that everybody’s personal circumstances are unique and our individual home-buying motives will vary based on availability, urgency, desire and personal choice. Various State Governments around Australia continue to stimulate the construction industry with financial incentives such as NEW HOME GRANTS and STAMP DUTY exemptions designed to encourage more people to build new homes as opposed to buying established properties. When choosing to build new, there are basically 2 options - buy a block of land outright and enter into a separate building contract with your builder of choice or alternatively, purchase a newly completed home or an “off-the-plan”/“speculative” home package for a designated home on a specific block at a predetermined contract price. | Here are several insights as to why we believe it is most beneficial for you to buy land and build as two separate contracts: - The price you’ll pay for a completed home (‘spec’ home) will most often be more expensive than one you undertake to construct yourself (contract home). The main reason for this is that you will have to pay the purchase costs and subsequent holding costs incurred by the builder or developer in the completion of the property (i.e. stamp duty, interest & profit on sales). These costs are levied at a much higher rate than you would incur as an owner/occupier. Add in an extra 5%-10% for “opportunity” costs and it could mean paying more than 10%-15% extra for the same property!
- The government incentives relating to stamp duty are much greater (better utilised) if you buy a block of land independently of the home construction (split contract). This is because stamp duty is calculated on the contract price of the transaction – if the transaction is on the land sale only @ say $450,000, then the stamp duty payable will be significantly less than if the stamp duty was calculated on a $750,000 complete purchase price – this will save you thou$and$
- Finally, there is obviously more design flexibility and customisation inherent in a contract package than if the home was already designed and under construction. This type of structure that includes a Contract of Sale for land coupled with a separate Building Contract for the construction of the home will necessitate the required lending facility that provides for a construction loan. Your lending institution or mortgage broker will certainly be able to assist OR you can talk to GRD about its funding options offered by our FIRSTCHOICE Mortgage products.
Remember, it's YOUR home, your own personal space and it should be special. GRD promises to deliver you the most inclusive home package in the market today – so get it right the first time! |