Are there lenders who can help with a 104 ha lifestyle block?

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Edmure
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Are there lenders who can help with a 104 ha lifestyle block?

Postby Edmure » Thu Jun 27, 2019 7:22 pm

I’m interested in purchasing a 104 ha (hectares) acreage with a house and a well-maintained dirt road. It will primarily be a lifestyle block with minimal farming and livestock. I was told by my bank CBA that they can’t help me here as the land size is unacceptable. I have a deposit of $200,000 and will only need the remaining $ 100,000. Are there lenders that can accept this situation?

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Otto Dargan
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Re: Are there lenders who can help with a 104 ha lifestyle block?

Postby Otto Dargan » Thu Jun 27, 2019 7:48 pm

Hello Edmure. Welcome to the forums.

Typically, lenders are reluctant to accept acreage/lifestyle properties that are bigger than 100 ha due to its limited marketability potential. Land sizes this big are considered on a case by case basis by only a couple of our lenders.

Lenders will consider the following when considering your hobby farm loan:

  • Loan to value ratio (LVR): Lenders may limit the maximum LVR you can borrow at 50% of the property value for land sizes exceeding 100 ha.
  • Property location: Remote locations are simply difficult to finance due to their limited market appeal. You can try our postcode calculator to find out if there are any potential lending restrictions to the location.
  • Access requirement: There must be a road or a well-maintained dirt road as an access point to the house and the property.
  • Utilities connected: Power and water must be connected. Solar, tank, bore or town water are accepted (some exceptions).


At this size, it is considered income producing even if that isn’t your purpose. Give us a call on 1300 889 743 or fill in our free assessment form so we can present a strong case to the bank of your intent and avoid the high-interest rate of a commercial loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Edmure
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Joined: Thu Jun 27, 2019 7:21 pm

Re: Are there lenders who can help with a 104 ha lifestyle block?

Postby Edmure » Thu Jun 27, 2019 9:08 pm

Ok. How do I ensure the loan is considered residential instead of a commercial loan? Can I hire a valuer to do the assessment before applying?

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Otto Dargan
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Re: Are there lenders who can help with a 104 ha lifestyle block?

Postby Otto Dargan » Thu Jun 27, 2019 9:31 pm

Hi Edmure,

You could but the bank will have their own valuer do a full assessment and whether or not the land is assessed as residential or commercial will depend on his assessment. Typically, the bank valuer will take into account five key criteria:

  • The property must not exceed $20,000 in annual gross income from agricultural activities.
  • No intent to develop the property for significant agricultural activities.
  • The value of the property carrying on a business is less than $500,000.
  • The business has not produced a taxable profit in 3 of the last 5 years including the current year.
  • You’re not relying on any potential farming income to prove that you can afford the acreage loan.

Based on the above, banks characterise properties by what the valuers identify.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Edmure
Posts: 3
Joined: Thu Jun 27, 2019 7:21 pm

Re: Are there lenders who can help with a 104 ha lifestyle block?

Postby Edmure » Thu Jun 27, 2019 9:51 pm

Ok. What’s the interest rates like if the acreage is assessed as residential vs commercial respectively?

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Otto Dargan
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Re: Are there lenders who can help with a 104 ha lifestyle block?

Postby Otto Dargan » Thu Jun 27, 2019 10:39 pm

Hi Edmure,

Residential rates are almost always cheaper than commercial loans. Please check out the interest rates on residential loans here on offer from our panel of almost 40 lenders.

For commercial farm loans, you can learn more about its features and check out the commercial interest rates here.


Give 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,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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