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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).
  • 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.