House and Land Packages: How Plasterers Can Buy Smart

Why House and Land Packages Work for Plasterers

As a plasterer, you've probably worked on plenty of house and land developments, finishing walls and ceilings to perfection. But have you considered purchasing one for yourself? House and land packages can be a smart pathway to achieve home ownership, particularly for tradies who understand the building process inside out.

A house and land package involves buying a block of land and constructing a new home on it as part of a single transaction. For plasterers, this option offers several advantages: you get a brand-new property with modern specifications, potential tax benefits, and the opportunity to build equity from day one. Plus, you'll know exactly what you're getting before you commit.

Understanding Your Home Loan Options for House and Land Packages

When it comes to financing a house and land package, you'll need to understand the specific home loan products available. Unlike purchasing an existing home, house and land packages typically require a construction loan structure that releases funds in stages as the build progresses.

Here's what you need to know about home loan features:

• Construction loan phases: Funds are released at different stages of the build, which means you'll often pay interest only on the amount drawn down
• Owner occupied home loan options: If you're planning to live in the property, you'll access different rates compared to investment properties
• Progress payments: Lenders release funds as each building stage is completed and certified

Most lenders offer home loan packages specifically designed for house and land purchases. These typically transition from a construction phase to a standard home loan once the build is complete.

Variable Rate, Fixed Rate, or Split Rate: What's Right for You?

Choosing the right interest rate structure is crucial when applying for a home loan. Each option has distinct home loan benefits:

Variable interest rate loans fluctuate with market conditions. When rates drop, so do your repayments. You'll also typically get access to features like an offset account and the ability to make extra repayments without penalties.

Fixed interest rate home loan products lock in your rate for a set period (usually 1-5 years), giving you certainty about your repayments. This can help with budgeting during the construction phase when your income might vary.

Split rate loans combine both structures, letting you fix a portion of your loan amount while keeping the rest variable. This gives you stability while maintaining flexibility.

As a plasterer, your income might fluctuate between busy and quieter periods. A split loan could give you the security of knowing your minimum repayments while allowing you to pay extra when work is plentiful.

Principal and Interest vs Interest Only Repayments

During the construction phase, many house and land package loans operate on an interest only basis. You'll only pay interest on the funds drawn down, which keeps repayments lower while the property is being built.

Once construction is complete, you'll typically switch to principal and interest repayments. This means you're paying off both the loan amount and the interest, helping you build equity in your property faster.

For plasterers looking to invest in property rather than occupy it, interest only loans might remain attractive beyond the construction phase. However, to improve borrowing capacity for future properties and secure your financial stability, principal and interest repayments are generally recommended for your primary residence.

Home Loan Features That Matter for Tradies

When comparing home loan options, look beyond just the interest rate. Consider these valuable home loan features:

1. Offset account: A linked offset account can save you thousands in interest. Your everyday savings sit in this account and offset the interest charged on your home loan
2. Redraw facility: Access extra repayments you've made if you need cash for tools, your ute, or unexpected expenses
3. Portable loan: If you sell and buy another property, you can transfer your loan without breaking it
4. Rate discount: Many lenders offer interest rate discounts based on your loan size or if you have other products with them

These features can make a significant difference to your financial flexibility, particularly important for self-employed plasterers managing variable income.

Getting Home Loan Pre-Approval Before You Commit

Before you sign a contract for a house and land package, securing home loan pre-approval is crucial. Pre-approval tells you:

• How much you can borrow based on your income and expenses
• What your likely interest rate will be
• The loan to value ratio (LVR) you're working with
• Whether you'll need to pay Lenders Mortgage Insurance (LMI)

For plasterers who might be self-employed or working on contract, pre-approval gives you confidence when negotiating with developers. It also speeds up the final home loan application process once you've chosen your package.

Understanding LVR and Lenders Mortgage Insurance

The loan to value ratio (LVR) is the percentage of the property value you're borrowing. For house and land packages, this is calculated on the completed value of the property.

If your LVR is above 80%, you'll typically need to pay Lenders Mortgage Insurance (LMI). This protects the lender if you can't make repayments. LMI can add thousands to your loan costs.

However, there are ways to avoid or reduce LMI:

• Save a larger deposit to keep your LVR under 80%
• Use a guarantor (typically parents) to reduce your LVR
• Access tradie-specific LMI waivers that some lenders offer
• Consider government schemes like the Home Guarantee Scheme if you're a first home buyer

Calculating Home Loan Repayments and Borrowing Capacity

Understanding your borrowing capacity is the first step in the home buying process. Lenders assess:

• Your income (including base wage, overtime, and consistent allowances)
• Your existing debts and monthly expenses
• Your employment stability and history
• Your deposit size and genuine savings

For plasterers, particularly those who are self-employed, demonstrating consistent income is vital. Lenders typically want to see two years of tax returns and financial statements.

When calculating home loan repayments, remember that during construction, you'll pay interest only on drawn funds. Once complete, your principal and interest repayments will be higher. Factor this into your budget to ensure you need lower repayments that align with your income patterns.

Accessing Home Loan Options from Banks and Lenders Across Australia

One significant advantage of working with a specialist mortgage broker is the ability to compare rates and access home loan options from banks and lenders across Australia. Different lenders offer:

• Different variable home loan rates and fixed rates
• Varying home loan benefits and features
• Different serviceability criteria for self-employed tradies
• Specialised construction loan products

Rather than approaching banks individually, a broker who understands the trades industry can present you with suitable home loan products that match your circumstances. They can also help you understand current home loan rates and conduct a home loan rates comparison to find the lowest rates available to you.

Why Plasterers Choose Tradie Home Loans for House and Land Packages

At Tradie Home Loans, we understand the unique financial situations plasterers face. Whether you're working for a company, running your own plastering business, or contracting, we know how to present your application to lenders in the optimal way.

We specialise in helping tradies achieve home ownership, whether it's buying your first home or expanding your property portfolio. Our team has experience with house and land packages and knows which lenders offer the most suitable home loan packages for construction purchases.

We'll help you understand the full range of home loan features available, from mortgage offset accounts to portable loan options, ensuring you make an informed decision that supports your financial stability for years to come.

Purchasing a house and land package is a significant step toward building equity and securing your future. With the right home loan structure and professional guidance, plasterers can successfully navigate this process and achieve the dream of home ownership.

Call one of our team or book an appointment at a time that works for you to discuss your house and land package home loan options.