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Re: What issues do you foresee with our application for a bush block?

Posted: Thu May 02, 2019 6:04 pm
by Otto Dargan
Hello Allen. Welcome to the forums.

Different lenders have different requirements for hobby farm (bush block) loans.
They look at:
  • Land size: You can borrow up to 90% for land sizes between 10-50 ha (hectares). Generally, the higher the acreage is the lesser Loan to Value Ratio (LVR) you can borrow.
  • Location: There are postcode restrictions as lenders want the property they can easily sell-off in the event of foreclosure. You can use our postcode calculator to find out how banks view your location.
    Income from the block: The turnover from the block cannot exceed $20,000 in a given year as it then would be considered a commercial farm.
  • Zoning: Some lenders also take into account property zoning while others don’t. Land can be zoned rural, rural residential or the equivalent for your state.
  • Access: The land must have easy all-weather access. Dirt roads are fine as long as they are maintained well.
    Services: The land must be within range to be connected to the electricity grid without excessive costs or have solar power.
We specialise in lifestyle block loans.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a hobby farm loan.

Cheers,

Re: What issues do you foresee with our application for a bush block?

Posted: Thu May 02, 2019 7:11 pm
by Otto Dargan
Hi Allen,

There is no hard and fast rule as to what improvements are considered residential and which are considered commercial. So, yes you should be able to reconstruct the dam as long as the area’s zoning allows it, if it doesn’t you may need to obtain approval from your local council.

Hobby farms or bush block are generally allowed to have:
  • Standard house, liveable shed or vacant land.
  • A small non-income producing orchard.
  • Machinery shed.
  • A few cattle or horses.
  • A dam.
  • Several paddocks and some bushland.
  • The likely buyer of this property would use it as a home or holiday house.

Cheers,

Re: What issues do you foresee with our application for a bush block?

Posted: Fri May 03, 2019 11:47 am
by Otto Dargan
Hi Allen,

The test for most bank valuers is whether there is an ability to offset business losses from a farm against other income.

Typically, this is where:
  • Turnover from the business activity is at least $20,000.
  • The business has produced a taxable profit in 3 of the last 5 years including the current year.
  • The value of the property carrying on a business is at least $500,000.
Speak with one of our hobby farm specialist mortgage brokers by giving us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an acreage loan with competitive interest rates.

Cheers,