How do Lenders treat Vacant Land Loans?

Most lenders treat vacant land loans like any standard loan however due to the risk compared to a property with a house they are careful on who gets approved. So when you offer vacant land as security you will be able to get a standard or normal loan. However, the lenders will require that:

  • The size of the block of land does not exceed a certain acreage ( i.e. this will depend on the policy of each lender)
  • The land is preferable inside major cities and regional centers as well as rural vacant land in lifestyle locations
  • The land must have direct access using all-weather road. Dirt roads are acceptable as long as they are well-maintained, and the property can be accessed by a standard vehicle, not a 4WD
  • The land must be within the range to be connected to the electricity grid without excessive costs
  • Town water and sewerage services are not required as many Australian properties have tank water or septic tanks instead
  • Fully serviced and partially serviced blocks are both acceptable, however some lenders/credit providers will not approve a loan for more than 80% of the value of the property if you are unable to connect town water
  • The land can be zoned rural, rural residential or the equivalent for your state or territory
  • The maximum Loan to Value Ratio (LVR) is 95%. Most lenders will lend you up to 90% LVR on standalone vacant land as security

Loan Products Available for Vacant Land Loans

You must contact a reputed brokerage firm that has access to many lenders. Its professionally qualified and expert finance brokers will assist you in choosing any of the following products:

  • Standard Variable Loan
  • Fixed Rate Home Loan
  • Basic Home Loan
  • 100% Offset Loan
  • Low Doc Home loan

Do you have to Build or Construct on Vacant Land within a certain time?

Some lenders/credit providers will take the land as security with no need to construct on the property in the short or long-term. However, some lenders will require you to build a house on the property (e.g. within 12 months of settlement). When choosing a lender/credit provider you should consider this aspect as it could force you to refinance or change lenders within 12 months of settlement if you have no intention of building on it.

Can I Get Pre-Approval on Vacant Land Loans?

Yes, an expert finance broker can arrange pre-approval for you. You will have the peace of mind knowing that:

  • You have a clear picture of what your borrowing limits
  • Your finance request has already been pre-approved, and you will know the conditions of your pre-approval
  • Can check on your Credit Score
  • You have the upper hand when negotiating the sale price of your vacant block of land with the vendor, real estate agents, etc.

So, these are the reasons why getting pre-approval will be beneficial for you. The current low-interest rates have never made it as easy as now for you get a vacant land loan. So, do not wait anymore. The time is NOW!