Land produces no rent and is harder to sell than a house, so lenders treat it as a separate product.
A vacant land loan funds a block with no home on it yet, usually converting to a construction loan when you build. Pre-approval for both stages, before you buy the block, avoids a gap between them.
Lenders want a larger deposit for land, often 20 per cent or more, and many limit block size, zoning and how long you can wait before building.
Part of the investment property loans guide.
Many lenders will only lend on land where you intend to build within a defined period, and some require a build contract before or shortly after settlement.
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What moves the number
Choose any that apply. Each shows roughly how much it changes the figure, the way a lender’s assessment would.
is an indicative borrowing figure at today’s typical rates. Lenders typically count around 80% of rental income, which is why an investment purchase can lift your number, your real figure comes from a proper assessment.
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Charles and the team recently assisted me with the refinance of my investment property.
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Many lenders will only lend on land where you intend to build within a defined period, and some require a build contract before or shortly after settlement. Buying land purely to hold is a narrower proposition and the lender list shrinks accordingly.
If your plan is to build later rather than soon, that should be stated up front rather than discovered at assessment.
Land in a new estate settles on registration, and registration dates slip routinely. Your approval has a shelf life shorter than most estate timelines, which means approvals need refreshing rather than being left to lapse.
The construction guide covers what happens once you move from land to building.
Four factors, and the first two do most of the work.
Generally more than for an established home, because maximum loan-to-value ratios on land are lower. How much more depends on the lender, the block size and the zoning, and on whether a build contract comes with the purchase.
A serviced suburban lot with plans to build is treated very differently from a large unserviced block.
Sometimes, and the lender list narrows. Many lenders require an intention to build within a defined period and some want a contract in place.
Where you genuinely intend to hold for several years, that should be stated at the outset so the file goes to a lender whose policy allows it.
Yes, considerably: beyond certain sizes lenders tighten maximum ratios or decline, and some treat larger blocks as rural security with quite different terms. Zoning compounds this, since rural-residential land is assessed differently from a standard residential lot.
The land loan is generally replaced or supplemented by a construction facility, which funds the build in stages against a fixed-price contract. Planning both together at the start is far simpler than arranging them separately, because the total borrowing has to work as one.
Often, yes: pricing frequently differs from standard home lending, reflecting the security. The gap varies, so compare it, particularly if you will hold the land for a while before building.
Charles can tell you which lenders will fund it, what deposit is realistic, and how the build finance would follow.
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General information only, not credit or financial advice. Professional lending policies, eligible occupations and loan-to-value thresholds vary by lender and change over time. Eligibility is confirmed against current lender policy in an assessment; nothing on this page is a promise that any lender will approve any application.
