Understanding House and Land Package Financing for FIFO Workers
As a FIFO worker, buying a home through a house and land package can be an excellent way to enter the property market. These packages offer the opportunity to purchase both the land and build a new home, often providing more value than purchasing an established property. However, the application process requires careful consideration of your unique financial situation.
How House and Land Package Loans Work
When applying for a home loan for a house and land package, you're essentially dealing with two separate transactions. The loan amount is typically split into two components:
• Land purchase settlement
• Construction loan that converts to a standard home loan upon completion
This structure affects your borrowing capacity and requires lenders to assess both the land value and the proposed construction. Home Finance & Mortgage Brokers who specialise in FIFO lending understand these complexities and can access Home Loan options from banks and lenders across Australia.
Key Financial Considerations
Deposit Requirements
Most lenders require a minimum 10% deposit for house and land packages, though some may accept 5% with lenders mortgage insurance (LMI). Your deposit needs to cover:
• Initial land settlement (usually 10% of land value)
• Stamp duty on the land component
• Additional construction stage payments
Interest Rate Structure
During construction, you'll typically pay interest only on funds drawn down. This means:
• Variable interest rate or fixed interest rate options are available
• Interest rate discounts may apply once construction completes
• Home loan interest rate calculations change throughout the build process
FIFO Income Assessment Challenges
Lenders often view FIFO income differently due to its variable nature. Your financial situation may include:
• Irregular pay cycles
• Allowances that may not be considered ongoing income
• Employment contracts that affect loan serviceability
Working with mortgage brokers who understand FIFO employment can significantly improve your chances of loan approval and help secure favourable Home Loan Rates.
The Application Process
The streamlined application process for house and land packages involves several stages:
- Get pre-approved for your total borrowing amount
- Submit your Home Loan application with construction details
- Provide banks statements and income verification
- Land valuation and construction assessment
- Settlement on land component
- Progressive drawdowns during construction
Maximising Your Loan Features
Offset Account Benefits
Many FIFO workers benefit from offset account features because:
• High savings during work rotations can offset interest
• Flexible access to funds between work periods
• Reduces overall interest payments on your home loan
Interest Rate Options
Choosing between variable home loan rates and a fixed interest rate home loan depends on:
• Your risk tolerance for rate changes
• Construction timeline expectations
• Current property market conditions
Building Home Equity from Day One
House and land packages often allow you to build home equity through:
• Potential property value increases during construction
• Principal reductions once standard repayments begin
• Renovation or improvement opportunities
Calculating Your Repayments
Calculating home loan repayments for house and land packages requires considering:
• Interest-only payments during construction
• Full principal and interest repayments post-completion
• Potential interest rate variations
• Impact of any offset account balances
Working with Specialist FIFO Lenders
Some banks and lenders offer specific products for FIFO workers, including:
• Flexible income assessment criteria
• Reduced documentation requirements
• Specialised construction loan features
• Understanding of FIFO employment patterns
The loan to value ratio (LVR) calculations for house and land packages can be more complex, making professional guidance valuable throughout the process.
Securing home finance for a house and land package as a FIFO worker requires expertise in both construction lending and FIFO income assessment. The right mortgage broker can help you access appropriate Home Loan options and guide you through each stage of the process.
Call one of our team or book an appointment at a time that works for you to discuss your house and land package financing options.
