6 Steps You Must Know When Buying Residential Land
1. Obtaining Finance
You need to know what you can afford to spend before you start looking for land. We suggest you talk to a broker or do some research regarding what you can borrow. You should feel comfortable the repayments will not cause you too much financial stress. However, do stretch yourself a little – home ownership doesn’t come easy but is a wonderful achievement, well worth going without a few of life’s luxuries to obtain. If you do need finance (as most people do) make sure there is a clause in the contract to allow you time to apply and obtain preliminary finance approval.
2. Lot Sizes
It pays to get out to some display villages and get an idea of what size home you would like before you embark on buying your land. Houses come in many shapes and sizes and it is important you select a block of land that will fit the home you are considering. You don’t need to buy your new home at this early stage but you do need to know what size lot you need. For example, how wide does the land need to be? How deep does it need to be? Lots on most land developments today will range from around 300 square metres to approximately 550 square metres. It is now reasonably rare to find lots over 550 square metres. Of course, the larger they are the more expensive they are so your budget will also play a role here.
3. Building Guidelines
These are introduced to developments to provide you with comfort that you are buying on a quality project. Always ask the sales person if the development has Design Guidelines and have a read through them before buying, most are general but will ensure the neighbourhood will be far superior in appearance than those without them. If the sales person says they do not have Design Guidelines we would suggest you move on and find a project that does. Some are more onerous than others and there may be extra building costs to obtain the look the developer wants but be assured, the more onerous they are the better the project will look in the future and could well result in better property values for you.
4. Paying Deposit
You will need a 10% deposit. If you don’t have 10% deposit. Consider a loan from family, personal loan or credit card. From the time of paying your deposit to the time the land needs to be paid for you may have as long as 18 months. Make sure the loan is paid off before you need to finalize your bank loan prior to settlement. Do not put yourself under too much pressure and borrow more than you can pay off before settlement.
5. Signing Contract
You will be required to sign a contract when you pay your initial deposit. This is not a big deal but we do suggest you read and understand what you are signing. If you have any questions – ask. The sales person is very knowledgeable and has a thorough understanding of the clauses within the contract. Do make sure you have read any special conditions, there is an area within the contract that is headed Special Conditions. You may need finance so it is important to have a clause added providing you a time frame of usually 30 days to obtain a preliminary finance approval from your bank.
6. Start Building
You cannot build on a block of land until it is fully developed (titled, with all roads and services provided). In the current real estate market most lots, unless you are buying in a built-up area, are not developed – this is referred to as buying off the plan. You should always ask the sales person when are they expecting title, this will allow you to know if it fits in with your plans. At present, you can expect to wait between 12 and 18 months for titles to be released and be able to commence building.
Latitude Real Estate sell some of Melbourne and regional Victoria’s finest residential land developments. We pride ourselves on only marketing and selling the highest of quality projects.