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A vacant land loan is a mortgage where borrowers will explore financing options from a lender to buy a block of land. The intent of inquiring about a land loan is to build a house on the block of land ultimately. Hence, unlike most mortgages used to finance the purchase of a land plus property package, a land loan is used to obtain ownership in a block of land.
Here is what you should know when looking for a loan to buy a vacant block of land without plans to build a home right away.
When looking at land loan options, the size of the land is vital as it will decide the deposit required to get the funds.
These limits can differ based on the lender’s terms and conditions. For instance, you could lend up to 95 per cent of the property’s value if the land’s size is up to 11 hectares. On the other hand, when looking to buy a block of land larger than this, you will typically require a minimum 20 per cent deposit.
Even when you do not have immediate plans to build on your land, the building can help you secure the loan. In lenders perspective, a borrower is at low risk who would be proposing to construct the house within a couple of years of owning the land than a borrower who has no intention to build.
Registered land implies it is available to build your home once you own it as road infrastructure is complete and all services are connected. Hence, when buying a block of land, it is essential to learn if the land you are considering buying is registered or not, as banks will not approve a loan on unregistered land.
Another critical factor to consider when trying to secure your funds is the location – where the land you are looking to buy is located. Zoning and access regulations will become an essential part of the assessment process.
As a prospective borrower, you should know to obtain a land loan like a standard mortgage, the land and eventual property must be used for investment or personal purposes.
The rate of interest for land loans are typically higher than the rates on standard home loans. The reason is land loans having a higher risk associated with them to banks. As compared to existing homes, land prices tend to fluctuate more frequently. Moreover, vacant land will usually take longer to sell. Hence, lenders are inclined to take a more conventional approach when offering a loan to buy a block of land.
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”