Will the bank accept a hobby farm with solar power?

Many Australians are adopting a rural lifestyle and buying a farm in Australia’s regional areas to take a break from their hectic city lifestyle.

These rural properties, also known as hobby farms may not have access to basic utilities like town water, gas or even electricity.

This is the reason why many borrowers purchase hobby farms with solar panels and build a self-sustainable lifestyle.

The majority of lenders may not accept hobby farms with solar panels, however, you can get approved if you can meet certain lending requirements.


How much can I borrow?

You may be able to borrow up to 95% of the property value for a hobby farm with solar panels if you meet the following lender requirements:

  • Access to water: You must have access to either town water or tank water. You’ll be limited to borrowing up to 80% Loan to Value Ratio (LVR) if you only have access to bore water.
  • Location: Most lenders have their own postcode restrictions and will require your hobby farm to be as close to a regional town as possible. However, some lenders can accept your home loan as long as the valuer can get to the hobby farm.
  • Land size: Hobby farms with solar panels that have a dwelling are accepted as long as the land is less than 50 hectares (ha).
  • Vacant land: Vacant land up to 11 hectares can be accepted.
  • Zoning: Your hobby farm must not be located in the land which is zoned industrial, commercial or for farm use as it’ll be treated as a commercial farm and your home loan may be declined. You may still qualify for a commercial loan though.
  • Sewerage services: Hobby farms with solar panels are accepted, however, they must have a proper system in place to manage waste. A built-in septic tank is generally acceptable to most lenders.
  • 100% loans: Available with some of our lenders if you have a guarantor.

You’ll still need to meet standard lending requirements such as stable income and clean credit history.

What if the hobby farm is bigger than 50 ha?

If your hobby farm is bigger than 50 ha, then you may be able to borrow up to:

  • 80% of the property value for hobby farms up to 60 ha.
  • 70% of the property value for hobby farms up to 100 ha. This is determined on a case by case basis.
  • Guarantor loans: Borrow up to 100% with select lenders only.

Rural properties over 100 ha may be considered as commercial farms and you may be limited to borrowing up to 60% of the property value.

If you’re able to ask your parents or a close relative to act as a guarantor, you won’t need a deposit which means you can get around these Loan to Value Ratio (LVR) restrictions.

We are specialists in helping people find the right lender to buy hobby farms with solar panels.

Please give us a call on 1300 889 743 or complete our free online assessment form and one of our brokers will call you to discuss your situation.


Why do I need solar panels for my hobby farm?

If a rural property doesn’t have electricity, then power poles need to be built.

This can cost you roughly $10,000 per pole plus another $10,000 charged for transformers, cables, and removal of any trees in between the property and the closest electricity grid.

It’s not uncommon for a hobby farm to be half a mile away from the nearest electricity grid making it ridiculously expensive to run the power lines up to the property.

Solar panels are comparatively much cheaper, especially in the long-term.

For small household consumption, solar panel installation can cost you less than $5,000.

Another good thing about solar panels is that the government provides a rebate on the installation costs in the form of small-scale technology certificates which you can exchange with the solar panel supplier as a discount on the purchase price.

In addition to this, every year you’ll save about $1,000 on your electricity bill and, if you produce more electricity than you consume, then the power will be added back to the grid and you can get further rebates!

Within 5-6 years, your solar panels will likely have paid for themselves!

Disclaimer: The information above shouldn’t be taken as financial advice. We recommend that you talk to a financial professional before you make any financial decision.


What’s the difference between a hobby farm and a commercial farm?

A hobby farm is a non-income-earning rural property used for the purpose of small-scale farming.

It’s generally used as a recreational pursuit with no intention whatsoever of making money out of it.

On the other hand, a commercial farm is run like any other business, with the intention of making profit.

If the bank identifies that you plan to make dollars out of the hobby farm, especially if that’s the only source of your income, then the farm will be treated as a commercial property, and you’ll need to meet stricter requirements to qualify.

Who decides if my property is a commercial or a hobby farm?

The valuer’s assessment determines whether your rural property is a commercial property or a hobby farm.

However, if your case is strong enough and you can prove that you can make the loan repayments without using any income from the farm, then some lenders may consider your application for a standard home loan.

If you’re in a similar situation, call us on 1300 889 743 or fill in our free online assessment form and one of our brokers will call you back with suitable options for you.


How do I apply for a hobby farm home loan?

We have a team of credit experts who have years of experience and understand how to present a case to highlight the strength of hobby farms with solar panels.

Give us a call on 1300 889 743 or fill in our free online assessment form and we can help you find a suitable home loan solution.

  • GGardiner

    What is it that determines whether my property will be considered a commercial farm or a hobby farm?

  • Hi GGardiner, the valuer’s assessment will usually determine whether your rural property is a commercial property or a hobby farm. However, if your case is strong enough and you can prove that you can make the loan repayments without using any income from the farm, then some lenders may consider your application for a standard home loan.

  • Piers B

    I want to buy a 55 ha property. Can you help me secure the loan? Where can I send details?

  • Hi Piers,

    Yes, our mortgage brokers should be able to help you with this. You can email us your details at info@homeloanexperts.com.au or simply call 1300 889 743 to speak with one of us directly.

  • sub

    Hi, I’m thinking of selling some of my produce from the hobby farm. Will banks consider this to be a commercial farm now?

  • Hobby farms are usually non-income-earning rural property generally used as a recreational pursuit with no intention whatsoever of making money out of it. You may earn a bit through selling the produce but banks may identify it as a commercial farm depending on the revenue and if that’s the only source of your income.

  • Mack

    What does it take to qualify for the first home buyers grant?

  • Hello Mack.
    The first home owners grant is available to people buying or building their first home and who can meet certain qualifying criteria. Please check this out under the “First Home Owners Grant eligibility criteria” section here:
    https://www.homeloanexperts.com.au/home-loan-documents/first-home-owners-grant-guide/

  • Kelly

    I’d like to invest in a property but not sure which one’s the most suitable. Is there any specific property-type that would be best for a first time investor like me?

  • Actually, there’s no single property that can be classified as the most suitable property to buy in Australia. That’s because your objectives and goals determine which property type is a better buy for you. Before you set your eyes on any single property, make sure it can work accordingly with your goals:. Please check out this page for further clarification on this:
    https://www.homeloanexperts.com.au/property-types/most-suitable-property-to-buy/