Vacant Land Mortgage

What Is A Vacant Land Loan?

A vacant land mortgage is a loan used to buy a block of land that doesn’t yet have a home built on it./p>

Because the property does not yet include a home, lenders usually apply stricter criteria than they would for a standard home loan. They may consider the block’s size, location, and marketability, particularly if it is large, remote, or in a specialised area.

However, lender policies differ, so finance may still be available even if one bank says no.

How Much Can I Borrow For Different Land Sizes In Australia?

• Up to 2.2 hectares (5.4 acres): Up to 95% of the property value.
• Up to 11 hectares (27.2 acres): Up to 95% of the property value (note that some lenders would restrict your loan to 80% of the property value).
• Up to 60 hectares (148.3 acres): Up to 80% of the property value (note that most lenders would decline your loan but some specialise in hobby farms).
• Up to 97 hectares (240 acres): Up to 80% of the property value.
• Over 97 hectares: On a case by case basis.
• Commercial farms: Up to 60% of the property value (all loans are assessed on a case by case basis using rural farm guidelines).
• Guarantor loans: Borrow up to 100% with select lenders only.
• If there’s a house on the block: If there’s a house on the land already, then you may be able to borrow 95% of the property value for properties up to 50 hectares in size.

For your reference, one hectare is equal to 10,000 m2 or 2.47 acres.

Note: Most lenders will have difficulty approving mortgages for vacant land exceeding 2.2 hectares. We have access to several lenders who can consider larger blocks of land, depending on the strength of your application.

What Will The Bank Assess For A Vacant Land Loan?

• Land size: The larger the land, the fewer people are interested in buying it.
• Location: Land inside major cities and regional centres can be financed quite easily. At least one of our lenders has no location restrictions Australia-wide.
• Access: The land must have direct access via an all-weather road; dirt roads are acceptable as long as they’re well-maintained and the property can be accessed by a standard vehicle (not a 4WD).
• Services: The land must be within range of the electricity grid without incurring high costs. Town water and sewerage services aren’t required as many Australian properties have tank water or septic tanks instead, but some lenders will limit borrowing to 80% of the value of the property.
• Zoning: Land zoned rural or rural residential can be considered but industrial, commercial and farm/agricultuaral zoning is case by case. If the land is subject to GST, it will typically be seen as a commercial property by the banks.
• Land use: The land should be used for personal or investment purposes, not as a farm. Hobby farms with minor farm improvements and that generate little income from farm production are usually accepted.
• Intention to build: Many lenders consider someone who’s building on the land right away or within a year to be a lower risk than someone who has no intention to build. If you’re not, the bank may consider you a speculative investor and decline your loan.

Ready To Get Started?

Our mortgage brokers specialise in home loans, large land blocks, and regional or remote properties, so we can quickly tell you what you may qualify for and what your best options look like.

Call us on 1300 889 743 or complete our free online assessment form for more information.