House and Land Packages in Camden — How the Finance Works
House and land packages are one of the most popular ways to buy in Camden and the broader South West Sydney Growth Area. New estates across Oran Park, Gregory Hills, Gledswood Hills and Catherine Field are full of them, and for good reason. You get a brand new home, a modern layout, and in many cases a lower stamp duty bill than buying an established property.
But the finance for a house and land package works differently to a standard home loan. If you go in without understanding how it's structured, it can cause delays, surprises and stress you don't need.
Here's how it works.
What Is a House and Land Package?
A house and land package bundles a block of land with a new home built by a developer or builder. Despite being marketed as one package, you're actually signing two separate contracts. One contract with the developer to purchase the land, and a separate building contract with the builder to construct the home.
This two-contract structure is important because it affects how the finance is set up, how stamp duty is calculated, and how the construction process is managed.
There are also turnkey packages, where the developer builds the home to completion before you settle. These are simpler from a finance perspective because you're essentially buying a finished product, similar to buying an established home. The discussion below focuses on the more common two-contract structure.
How the Finance Is Structured
Because you're buying land and building separately, most house and land packages require two loans working together.
The land loan covers the cost of the block. This works like a standard mortgage. You borrow to purchase the land, the land settles in your name, and you start making repayments on this portion of the loan immediately.
The construction loan covers the building component. This is where things work differently to a standard home loan. Rather than receiving the full loan amount at settlement, the lender releases funds to your builder in stages as construction milestones are completed.
How Construction Loan progress payments work
The construction loan releases funds progressively as the build moves through each stage. The typical stages and the approximate percentage of the build cost released at each point are:
Slab — the concrete foundation is poured, around 15% to 20% of the build cost is released.
Frame — the timber or steel frame of the home is completed, around 20% is released.
Lock up — external walls, windows, doors and roof are in place, around 20% is released.
Fit out — internal work including plasterboard, cabinetry, fixtures and fittings are installed, around 25% to 30% is released.
Completion — the home is finished and the occupancy certificate is issued, the final 10% to 15% is released.
During construction you only pay interest on the amount that has been drawn down, not the full loan amount. So in the early stages when only the land loan and the first drawdown are active, your repayments are lower than they will be once the build is complete. This is called interest-only during construction, and it's one of the practical benefits of the construction loan structure.
Once the build is complete and the occupancy certificate is issued, your construction loan converts to a standard principal and interest home loan and your full repayments begin.
Stamp Duty on House and Land Packages
This is one of the biggest financial advantages of buying a house and land package in NSW, and one that many buyers don't fully understand until it's explained to them.
In a two-contract house and land package, stamp duty is calculated on the land price only, not the combined value of the land and the completed home. This is because at the time of land settlement, the home hasn't been built yet.
On a package where the land price is $450,000 and the build price is $450,000 for a total of $900,000, you'd pay stamp duty on $450,000 rather than $900,000. That can represent a saving of tens of thousands of dollars compared to buying an equivalent established home at the same total price.
For first home buyers, the saving can be even more significant. If the land price is under $350,000, a full stamp duty exemption applies for eligible first home buyers. If it falls between $350,000 and $450,000, a partial concession applies. This is one of the reasons house and land packages in Camden are so popular with first home buyers — the combination of a new home and a significantly reduced or eliminated stamp duty bill makes the upfront cost much more manageable.
You can read more about stamp duty exemptions for first home buyers in our Camden first home buyer guide here.
What About the First Home Guarantee?
Yes, the First Home Guarantee applies to house and land packages. Eligible first home buyers can use the scheme to purchase with as little as a 5% deposit and no Lenders Mortgage Insurance.
For the scheme to apply, the total value of the package including land and construction must come in under the cap. We've written a full explainer on the First Home Guarantee here.
Key Things to Check Before You Sign
Fixed price contract. Make sure your building contract is a fixed price contract. This means the builder cannot come back and ask for more money because of rising material costs or labour changes. Variable price contracts exist and can lead to significant cost blowouts during the build.
Inclusions and variations list. Know exactly what is and isn't included in your package. Driveways, landscaping, fencing, floor coverings, air conditioning and window coverings are common items that are sometimes not included in the base price. These can add a meaningful amount to your total cost if they're not factored in upfront.
Build timeframe. Most lenders require construction to commence within a certain period after land settlement, typically twelve months. If your builder's timeframe pushes beyond that, it can create complications with your land loan. Check the builder's expected start date before you sign.
Progress payment timing. Understand when the lender will release funds and ensure your builder is aware of the process. Delays in progress payment releases can slow down construction, so clear communication between your builder and your lender matters.
A Simple Example
Let's say you're buying a house and land package in Gregory Hills. The land price is $420,000 and the build price is $560,000, for a total of $980,000.
As a first home buyer using the First Home Guarantee with a 5% deposit:
Your deposit is $49,000 (5% of $980,000). You pay stamp duty on the land price of $420,000 only. As a first home buyer with a land price under $450,000 you'd pay a reduced stamp duty rate rather than the full amount, potentially saving around $15,000 to $20,000 compared to buying an established home at the same total price. Your construction loan draws down in stages as the build progresses, so your repayments start lower and increase as more of the loan is drawn down.
Once the home is complete, your loan converts to a standard principal and interest home loan and you move in.
How We Can Help
House and land package finance is more complex than a standard home loan, and getting the structure right from the start makes a real difference. The wrong lender, an incomplete understanding of how drawdowns work, or a building contract with unexpected costs can all create problems that are much harder to fix once you're in the middle of a build.
We work with buyers across Camden and South West Sydney on house and land packages regularly. We know which lenders suit construction lending, how to structure the finance to work for your situation, and what to look for before you sign your contracts.
Get in touch at our Mortgage Broker Camden page and let's talk through your options.
