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In simple terms, equity is the difference between what your home is worth, and how much you owe on it. For example, if your home is worth $400,000 and you still owe $250,000, your equity is $150,000.
Within five to ten years of owning a home, you will have built a sizable amount of equity. If you are looking at purchasing another property, banks will generally lend you up to 80% of a home’s value without having to use Lenders Mortgage Insurance, and you may be able to access a portion of your equity to use for the remaining deposit.
For a closer look at using equity, check out RateCity’s guide to using home equity to buy an investment property.
House and land packages are a great way to reinvest your equity and make a return by using it as a rental property.
Packages offer convenience and the homes are specifically matched to suit the land. Building a house and land package will also result in paying less stamp duty. This is because you only have to pay stamp duty on the value of the land as the home hasn’t been built yet.
Potential investors should also consider the benefits of higher quality materials and construction techniques that new homes offer, resulting in little to no maintenance costs, energy efficient technologies and warranties on the home, its fittings and appliances.
Check out all the latest house and land packages by Hotondo Homes here.
When looking to use your equity, the bank will take into account your age, income, family, cost of living and any additional debt you may have incurred. It is also wise not to use every last cent of your equity so you can give yourself a safety buffer in case of emergencies. Before you start building your property portfolio, it is best you speak to your banker or broker.
*Hotondo Homes is not an authorised financial adviser so please seek professional advice for your banking enquiries.
Once you decide you would like to build a new home you will undoubtedly come across the wonderful world of house and land packages. With only the single contract to deal with, fewer decisions to be made and the relatively quick build time, house and land packages offer a lot of appeal.
There are a few factors however that still need to be considered, so take the time to thoroughly examine which house and land package is best for you.
Before you go any further, stop and decide on a location that will best suit your lifestyle.
Important things to consider when selecting the location of your future home include what kind of public transport the area offers, distance to family and friends, whether there are schools and shops nearby, and if you enjoy a good walk with your pet make sure there are plenty of parklands available.
Make sure you have at least two or more potential neighbourhoods in mind so you have more house and land options to discuss with your builder.
Always ask the above two questions before considering any builder. Do your research to ensure they are reputable and have good referrals. Once this all checks out you can begin to look at specific home designs.
Now comes the fun part, selecting your house and land. This can be broken down into two considerations:
Land – The slope of the land is a primary factor. Generally the steeper the block, the more it will cost to build. You should also ask the soil to be professionally inspected for its ability to support your home. Finally check the orientation of the block. When you build, main living areas should be facing north to catch the sun and help reduce heating and cooling costs.
House – Check out as many display homes as possible. Compare the designs and choose one that will best suit your lifestyle. Find out what it will cost you to change any aspects of the home you may wish to alter, and double check what features are included or not included such as the driveway, flooring or letterbox.
If possible aim for a fixed-price building contract to help avoid any unexpected fees.
For help selecting the best house and land package for you, speak to your local Hotondo Homes builder by clicking here.