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.
Compare vacant land home loans
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.
Rates last updated January 27th, 2020
How does a vacant land home loan work?
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 buys a block of land
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.
Which lenders offer vacant land home loans?
There are a range of lenders which offer loans for vacant land. These include:
AMP - AMP's Land Loan allows you to purchase vacant land and comes with a redraw facility and more.
Gateway CU - Similar to AMP, Gateway offers their Land Loan. This comes with your choice of fixed or variable rates and more.
How to compare vacant land home loans
Consider all of the following features when comparing the advantages and disadvantages of a variety of vacant land home loans:
Rate. The interest rate is a hugely important feature on any home loan because it plays a big role in determining how much you will have to repay over the life of the loan. However, the interest rate doesn’t take any of a loan’s fees into account, so make sure to look at the comparison rate as well.
Fees. Some loans may have hidden fees so always ensure you’re fully aware of any fees that apply to your vacant land home loan.
LVR (loan to value ratio). As vacant land is harder for a lender to sell in the event that a borrower defaults, many lenders take quite a conservative approach when offering land loans. As a result, you may find that some lenders offer a lower maximum LVR than you would expect, so compare this feature before you apply.
Repayment options. Can you make additional repayments at any time? Can you pay the loan off early without incurring a fee? Can you choose a repayment schedule (weekly, fortnightly or monthly) to suit your budget?
Other features. It also makes good financial sense to look at the other features a lender may provide, including redraw facilities, offset accounts and loan split options.
The benefits and considerations of a vacant land home loan
Benefits
Purchase land. Regular home loans don’t usually allow you to purchase land without a home on it but these special loan products do.
You don’t have to build straight away. Unlike a construction loan, which typically requires you to build a home within 12 months (or perhaps up to three years), vacant land loans have no such requirement.
Refinance. You can also use one of these loans to refinance an existing vacant land home loan.
Considerations
Lower LVR. Because of the conservative approach lenders take towards vacant land home loans, many will offer a low maximum LVR. As a result, you may need to save more for a deposit before you will be approved for a loan.
When might a vacant land home loan suit me?
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.
Frequently asked questions about vacant land home loans
This can vary greatly between lenders but, as a general rule, the larger the property the lower the LVR you will be able to borrow.
The lender will assess factors such as the size of the land, where it is located, how easy it is to access and its access to services, the zoning of the land, whether you intend to build on it and whether you are planning on buying for personal or investment purposes.
With a construction loan, the lender will require you to build a home on the land within a certain time period, usually one to three years. No such requirement applies to vacant land loans.
For the right borrower, some lenders will be willing to loan up to 97% LVR. However, many lenders take a much more conservative approach to vacant land home loans.
Marc Terrano is the lead publisher of Points Finder and a co-host of the Pocket Money podcast. He was previously a writer and publisher for home loans at Finder. Marc has a Bachelor of Communications (Journalism) from the University of Technology Sydney. He’s passionate about creating honest and simple reviews and comparisons to help Australians get the best value for their money.
Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.
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?
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.
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?
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 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
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.
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.
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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.