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If you've got your eye on a block of land that you'd love to buy and build a house on 'one day', a vacant land loan could offer the funds you need. Although it's typically harder to find a vacant land loan than it is to borrow money to purchase a house and land package, many lenders are now offering vacant land loans to help you snap up that perfect piece of Australia.
This table displays information about land loans from various lenders. Some of these loans may not be available for purchases of acreages or larger pieces of land. If the green button beside a product is labelled "more info" it means Finder does not currently have a partnership with this lender or a relevant broker. You can contact the lender directly via their own website.
As the name implies, these loans can be used to purchase vacant blocks of land. The land must typically be non-income producing, while different lenders may impose different loan conditions depending on the size of the land you plan on buying. These special types of loan often take the place of home loans, because some lenders won't allow you to take out a home loan if there is no habitable dwelling on the property you are buying.
In some ways a vacant land loan is similar to a construction loan, but the key difference is that construction loans place a time limit on when you must complete the building project on your property. This limit is usually set at between one and three years. With a vacant land loan, however, there are no time pressures attached in terms of when you need to start or finish construction.
James and his young family are currently renting a house in the suburbs but they would one day like to own a home in a neighbouring suburb. Buying a house in that suburb is currently out of James' reach financially, but when he stumbles across a cheap block of land he knows it's perfect for him. He considers taking out a construction loan to purchase the property, but he knows he probably won't be able to afford to build his dream home in the next few years.
With this in mind, he approaches his bank about a vacant land loan. He gets a competitive variable rate and is able to borrow up to 90% of the land value, allowing him to purchase the land at a price he can afford with a view to one day building the perfect home for his family.
There are a range of lenders which offer loans for vacant land. These include:
Consider all of the following features when comparing the advantages and disadvantages of a variety of vacant land home loans:
There are many situations in which you could benefit from a vacant land home loan, all of which would obviously require you to seek finance to purchase a vacant block of land. For example, perhaps you're building an investment portfolio for your retirement, or maybe you simply want to snap up a prime piece of land while it's available. Of course, you may also plan to build your dream home on that land one day. You might just have to wait a few years until you can afford to do so.
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I only need a small amount (50K) to borrow to buy a vacant block of land. With the intention to pay it off quickly. I’ve heard that a line of credit is an option as most lenders will not consider a small loan for land purchase. What would you recommend?
Hi Little Bo Peep,
Thanks for your comment. It’s good to know that you are looking to buy land.
A line of credit loan usually allows you to borrow up to 80% of the value of your equity, and this amount is given to you as a credit limit. You can find more information on this by referring to this page.
Ultimately, you’ll have to reach out to the bank to see if they have type of option they can offer for you. As a friendly reminder, carefully review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy. “HOME LOAN: It is also a good idea to speak to a mortgage broker to get professional, personalized advice.
Mortgage brokers are professionals who sort through hundreds of loans in the market so borrowers don’t have to. A mortgage broker’s service is usually free because they earn a commission from the lender. A good mortgage broker can make life easier and they can help borrowers in difficult circumstances to find a home loan that matches their situation.
Hope this helps and feel free to reach out to us again for further assistance.
Best,
Nikki
I work full-time. I want to buy some land. I’m having trouble getting my deposit together. I know I can afford the repayments easily. Is there anything I could do to get a loan for land with a very small deposit?
Hi Mon,
Thank you for getting in touch with Finder.
Yes, that is possible to get a low deposit vacant land home loans. On this page you’re looking at, you would see lenders with max LVR of 90% or 95% which means that you would only need to have a deposit of either 10% or 5% of the vacant land’s value. I also suggest that you seek help from a mortgage broker since you’re looking for providers that offer the cheapest rate and low deposit home loan.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
I want to purchase a block of land with a small deposit I don’t have good credit history I have a full time job good pay I am paying off my bills please let me know what I can do cheers Ben
Hi Ben,
Thanks for your inquiry
There are lenders that may be able to help you out with that. Please click here for a comparison of lenders that offer home loans for people in rough situations.
In addition to that, you may also speak with a mortgage broker to in order to get a professional assessment and to make sure everything is taken into account before you apply.
Hope this information helps
Cheers,
Arnold
what interest % on vacant land loan?
How much i have to pay first deposit?
Hi Galina,
thanks for the question.
This will depend on the lender and the particular product. You might wish to contact a mortgage broker to find out what interest rates and deposit requirements would be for your particular situation.
I hope this helps,
Marc.