Marsden Park, Schofields, Box Hill and Riverstone are among Sydney's biggest new-home areas. For many buyers, a house-and-land package is the most affordable way into a brand-new home. The finance works differently from buying an established house, so it pays to understand the moving parts.
How a split contract works
- Land contract. You pay a deposit, then settle the land when it's registered. That can be weeks or many months away.
- Building contract. Signed with the builder, usually around the same time. Work starts after the land settles.
- Construction loan. The lender releases funds to the builder in stages as work is completed.
Progress payments
The build is paid in stages, typically deposit, slab, frame, lock-up, fixing and completion. You pay interest only on the amount drawn so far, so repayments start small and grow. Our guide to construction loans and progress payments covers each stage.
Grants and stamp duty
For eligible first home buyers, stamp duty on vacant land is exempt up to $350,000 with a concession up to $450,000. The $10,000 new home grant is based on the combined land and build value, capped at $750,000. See our NSW stamp duty guide for details, and the 5% Deposit Scheme guide, which also covers land-and-build purchases within the price cap.
Hidden costs to budget for
- Driveway, paths and fencing
- Landscaping and turf
- Window coverings, light fittings and letterbox
- Site costs if they weren't fixed in the contract
- Rent or your current mortgage while you build
Valuation risk
Lenders value the finished home "as if complete". In estates with a lot of similar stock, a valuation below the package price is possible. Check comparable sales and discuss a buffer before you sign. Pre-approval with a lender experienced in construction is a good first step.
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