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Vacant Land Mortgage

Did you know that borrowing to buy vacant land is more difficult than borrowing to buy a house?

Banks have stricter lending guidelines for blocks of land, and in many cases, they won’t finance remote or large properties.

The good news is that each lender has different lending guidelines.

By applying with the right bank you can get your mortgage approved!

How much can I borrow for different block sizes?

  • 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).
  • Over 60 hectares (148.3 acres): Up to 70% of the property value (all loans are assessed 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.

Note: Most lenders will have trouble approving mortgages for vacant land if the land is over 2.2 hectares in size. We have access to several lenders who can consider larger blocks of land depending on the strength of your application.

Our mortgage brokers are specialists in financing vacant land so please call us on 1300 889 743 or complete our free assessment form to find out how much you can borrow.

What will the bank assess?

  • Land size: The larger the land, the fewer the number of people who are interested in buying it. This means that larger properties can take some time to sell, which makes them less favourable security for a mortgage. This is why it’s easier to finance smaller blocks of land. For your reference, one hectare is equal to 10,000 m2 or 2.47 acres.
  • Location: Land inside major cities and regional centres can be financed quite easily. Rural vacant land in lifestyle locations, hobby farming regions or small towns isn’t accepted by most lenders, but can be financed if you apply with the right bank. At least one of our lenders has no location restrictions Australia wide. Most banks have categorised each postcode by risk and won’t approve home loans for vacant land in higher risk locations.
  • Access: The land must have direct access using 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 to be connected to the electricity grid without excessive costs. Town water and sewerage services aren’t required as many Australian properties have tank water or septic tanks instead. Fully serviced and partially serviced blocks are both acceptable, but some lenders won’t approve a loan for more than 80% of the value of the property if town water can’t be connected.
  • Zoning: Land can be zoned rural, rural residential or the equivalent for your state. Be careful with land that is zoned industrial, commercial or for farm use as they are often not accepted. A good rule of thumb is that if the land that you’re buying is subject to GST, then it’d be considered 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 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 interested in constructing a house then the bank may consider you to be a speculative investor and depending on their policy, they may decline your loan.

Why are the banks so conservative?

When the economy is weak, vacant land tends to fluctuate in value and may take longer to sell. This is particularly true in country areas and remote locations where land prices fluctuate more often.

Normal houses on the other hand tend to have more potential buyers and sell much faster. Banks are more conservative when approving a home loan for vacant land as a result of the higher volatility of land prices.

Apply for a home loan

Please call us on 1300 889 743 or complete our free assessment form for more information about how we can help you.

Our mortgage brokers are specialists in financing remote properties and large blocks of land, so they can quickly let you know if you can qualify for a mortgage.

  • T Cook

    Is there any restrictions on the land size that we could get a home loan for? Actually, I’m seeking to buy a vacant land of 25 acres in north Adelaide, so how much can I borrow from the bank?

  • Hi T Cook,

    There is no size limit set for a home loan, however the maximum some lenders can go up to 60 Ha. The lender bases its risk on the purpose and marketability of the property. As the property size increases, the risk to them also increases as large properties are usually difficult to sell quickly. Most lenders don’t lend to properties over 10 Ha, but as yours is just above 10 Ha, you could still get approved for 95%.

  • JW Fereday

    I have $40,000 in savings but I’d like to borrow at 90% LVR to buy a $385,000 vacant land. Can one of your mortgage brokers help with this?

  • Hi there, yes, our mortgage brokers can help with this. There are banks that can go up to 95% LVR for a land size of up to 11 hectares but over that, they will only lend 80%. This means that you needs to have a $77k deposit to reach 80% LVR on this basis. However, you can also go guarantor or use a personal loan as the rest of your deposit if your income is strong. Please call 1300 889 743 to discuss this in detail with one of our vacant land mortgage specialists.

  • TuiSiong Hie

    Hi, I currently have a shared (sibling) portfolio loan where I have up to $80K borrowing capacity. I would like to purchase a vacant lot in Katoomba/Leura for roughly $220K. Are there any lenders that would lend the $140K difference?

  • Hi TuiSiong

    Yes that should be fine. We’ve got experience funding vacant land around Katoomba / Leura. Be careful as some have fire zonings that mean that construction is expensive. Look out for flame zone in particular! Also if there are not power poles or other utilities connected then this can be expensive.

    So the cheap blocks of land often have a hidden catch!

    A joint loan with your siblings can be used as a deposit. Some lenders will assess the debt as if it is 100% yours and others wont. We can work out what is best.

  • TuiSiong Hie

    great! I’ll fill out your contact form.

  • tori

    Aren’t there any 100% vacant land loan offers?

  • No deposit land loans are available on the condition that you’re building on the vacant land within one or two years. In some cases, we can negotiate with the lender to waive the requirement to build.

    Land loans are very location dependant so if you’re not buying in a capital city or regional centre please call us on 1300 889 743 or complete our free assessment form to find out if your location is accepted by the banks.

  • Angelica

    I am in a very unique situation so I would like to discuss this in detail with one of your land loan experts. I have a couple of pdf documents that I would like to send. Where can I send these and explain my situation? I would really like to talk only after they have a look at my situation and assess it a bit.

  • Hey Angelica,

    You can email your details and all the necessary info including the documents to us at info@homeloanexperts.com.au and one of our brokers will look into it. We will then contact you within 24 hours to discuss it all in detail.

  • Alyce Wedding

    Hi there, my brother, husband and myself are looking into buying some land and building with a builders licence. We have gone to the bank and our approx. borrowing capacity based on our current incomes is around $600 – $650k. What is the process of buying land separately and then building on it privately and is this way of building harder to get bank approval?

  • Hi Alyce,
    If you mean building it yourself then yes this is much harder to finance. You can likely borrow 60% of the property value unless one of you is a licenced builder.
    Or do you mean using equity in other properties / your own cash to fund the construction? That is ok and a lot of people choose to do this where they have enough spare funds / equity.

  • Alyce Wedding

    Hi there, yes I am meaning we build ourselves :-) we are in the Building and Construction industry so we know a few builders instead of going with the usual ones like Metricon, Coral etc. We are wanting to buy land and build then use the equity in that property to build another property in order to start our property portfolio.

    Between the 3 of we are hoping to have approx. $55 – $60k for a deposit amount.

  • Hi Alyce that wouldn’t be enough for an owner builder loan unless you already own other properties with lots of equity in them. I’d say you’d likely have to go with a contract builder unless you have your own building licence in which case we could assist.
    You can read some more info here https://www.homeloanexperts.com.au/property-types/owner-builder/

  • Alyce Wedding

    Oh sorry I got confused, we would go with a contract builder not owner builder.

  • Ok then likely this should be ok. It is a little more complex with three people buying together but as long as you have talked to each other about your future plans and are on the same page then this is fine. Please contact us if you’d like our help to get your construction loan approved https://www.homeloanexperts.com.au/free-quote/

  • Jolene Banks

    We are looking at purchasing a rural vacant block of land in 4310 but no body loans for our area for land with no dwelling? is there anything else we can do?

  • Hi Jolene,
    The Boonah area is considered high risk by several lenders despite its proximity to the GC / Brissie. We can finance up to 95% for vacant land up to 11 ha or if you buy a property with a house on it then 50 ha should be fine. Larger sizes would require a larger deposit.

  • Richie K

    Hello, 5 banks already say no to a loan for a rural vacant land, size greater than 50 hectares, that was the problem. All the banks my broker spoke to says it was outside their scope, got something to do with new “Regulations”.

    Actual size: 65 hectares
    Postcode: 4275 Canungra area

    I have more than 30% deposit
    I also have a solid income. So repayment will be no problem.

    Does anyone know which smaller/other banks would ready to take this on.

    Contact me on
    richie_k@live.com

    Don’t waste my time please, as I myself and a few brokers already done the research.

    Please do full research before contact me. Once sure, I am happy to hear from you.

    Richie

  • Hi Richie,
    Vacant land over 50ha is difficult. If it was a house this would be ok.

    This is a case by case basis and we’d need to know more info about the property, in particular regarding access, if there are services available (power) and the likely uses of the land.

    We’d need a full application from you to assess it. Unfortunately it isn’t possible to assess just the location and size of the property and determine the lender that can help.

  • Richie K

    Yeah, Im ready for full application after you assessed it.

    heres the answers you seek.

    – Site has power
    – site has no building
    – recreational use, weekend motorbike (no income will be produce from this)

    – price is $400,000
    – I have 35% savings, and solid income.

    ‘case by case’ that is what my broker said aswell, but after a week, he turned around and said no, bank just got a regulation that if >50 hectares, its outside their scope.

    So if you know any private lenders that don’t have that restriction. Call me.

    Richie

  • Unfortunately Richard we cannot assist without a full application. It takes a significant amount of work for us to assess and find solutions for this kind of application and without the full picture it isn’t possible for us to help you. If you’d like our help then please complete this and contact one of our brokers https://www.homeloanexperts.com.au/free-quote/
    We do have access to more lenders for rural finance than other brokers so while I can’t offer you any guarantees I can say that it isn’t a waste of your time to send us your full details.

  • Jess

    Hi can you advise which lender would look at a $357,000 mortgage on a 45 acre property in Nornalup WA 6333. Purchase price of the rural zoned land is $420,000. The property has a weekender classified shed with plumbing septic, power and water and we intend putting housing onto the land in the next 12 months.

  • Hi Jess,
    It would depend on the shed, however if it’s classified as vacant land we can lend 80% of the property value.
    If it’s classified as a house then we can lend 95%. When you build we can lend 95% of the land cost plus cost of construction.
    So potentially you will need a little more money to settle the land but when you build you will have enough equity. You’d be eligible for competitive interest rates.
    If you’d like our help then please contact us here https://www.homeloanexperts.com.au/free-quote/