Did you know the banks hate vacant land?
From a banks point of view vacant land is a riskier type of security than a normal house or unit. Why? Quite simple, there are less people who want to buy vacant land and so blocks of land tend to have extended selling periods or have fluctuating values!
Lenders are already conservative when assessing low doc loans, so when you tell them that you are buying land that may be the straw that breaks the camels back. As a general rule normal sized blocks of land in metropolitan areas are fine for most lenders. It's the regional, rural and remote locations that get given the cold shoulder by low doc lenders!
Will the bank force me to build?
The majority of lenders will require you to start building on your land within two years. Many people do not intend to build on their land but instead want to hold onto it for the future. In these cases we can help you find a lender that does not have any construction timeframe restrictions.
Converting to a construction loan
When you do decide to build your land loan will be converted to a low doc construction loan. This is a simple process whereby we submit a loan increase to your lender along with the council approved building plans, specifications and building contract. If your lender doesn't lend for the type of construction you have chosen then we can refinance your loan to another lender that will help.
How much can you borrow with a land low doc?
All of our lenders will not lend more than 80% LVR (80% of the value of the land). The majority of lenders reduce this amount to 60% (or less) if you are buying a block of land in a remote location. One of our banks can lend up to 80% LVR for almost all types of vacant land in any location in Australia!
Access problems
What about if you can't access your land? Lenders will not lend a cent against a property unless it has good access. If you have to go through a neighbours land to get to your property then no lender can help you unless there is some sort of legal right of access to your property. From a lenders point of view nobody would want to buy a block of land that can't be accessed!
Some properties are remote and are only accessible by forest track through crown land such as a state forest. These properties are more difficult to finance, however if there is legal access that does not rely on a lease that could theoretically be cancelled then we can usually arrange a low doc loan for most self employed borrowers.
If your property can only be accessed by a dirt road that is poorly maintained then during bad weather your land may become completely inaccessible! The majority of banks will decline home & investment loans with these properties as security. Talk to us for possible options for financing land that is difficult to access.
Zoning
Land inside major capital cities and regional locations would have a standard residential zoning. This is acceptable to almost all lenders. Rural areas have zonings such as rural residential, rural and farm zoning. The majority of low doc lenders will lend for rural residential properties as long as they are in a major town with a population of more than 5,000 people. Rural and rural residential zoned land in areas outside of major towns can be financed as long as they do not exceed 50 ha.
Farm zoned land is much more difficult. If the property is not being used as a farm and can be used for normal residential housing then there is normally no problem. Low doc loans are generally unavailable for land that can only be used as a commercial farm.
Will I pay a higher rate because I'm buying land?
No, almost every one of our lenders has the same interest rate for land and construction low doc loans as they do for normal low doc loans. Why not check out our competitive low doc interest rates?
How do I apply for a vacant land low doc loan?
You can apply for a vacant land loan by enquiring online or going to our apply for a low doc loan section. We'll be in touch with some free quotes from leading bank and non-bank lenders that specialise in low doc, lo doc and lite doc lending.
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