Financing a large rural property?
Loans are available up to 200 hectares!

Is it a hobby farm or a commercial farm?

Banks are more interested in approving home loans for smaller lifestyle properties, not to a farm with a farm business. Commercial farms can apply for a commercial loan or agricultural loan instead of a home loan.

Generally speaking, the use of the hobby farm should be for the sole purpose of private residential occupation and must not be used for commercial income producing purposes.

In some cases, the land may be used for the growing of crops and/or the holding of limited stock, however this is only for private use.

Despite this, you can earn an income through the renting of the property to a tenant.

What do banks assess?

Some of the things banks look at include:

• Land size: To qualify with most banks the land must be less than 10ha. Some banks can consider up to 50ha.
• Location: Each lender has their own postcode restrictions. At least two of our lenders have no postcode restrictions.
• Access: Dirt roads are fine as long as they are well maintained.
• Services: Unserviced blocks (no power connected) can be a problem but town water and sewerage services are not required if you have have tank water or septic tanks instead.
• Zoning: Be careful with land that is zoned industrial, commercial or for farm use as they are generally not accepted.
• Land use: Hobby farms with minor farm improvements and no income from farm production are usually accepted.

Why are banks so conservative?

During times of drought or during economic downturns, farms tends to fall in value and take longer to sell. This is particularly true in country areas and remote locations where land prices fluctuate more often.

Because of this higher volatility, banks tend to be more conservative when approving a home loan for hobby farms.