Vacant land loans

Land loans, or vacant land loans, are mortgages for buying vacant land.

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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, 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 now offer vacant land loans to help you snap up that perfect piece of Australia.

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

  • 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.
  • 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

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8 Responses

    Default Gravatar
    LittleOctober 18, 2019

    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?

      Default Gravatar
      NikkiOctober 19, 2019

      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.

      Ultimately, you’ll have to reach out to the bank to see if they have the 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. 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.


    Default Gravatar
    MonAugust 5, 2019

    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?

      Avatarfinder Customer Care
      JeniAugust 6, 2019Staff

      Hi Mon,

      Thank you for getting in touch with Finder.

      Yes, it is possible to get a low deposit vacant land home loan. Our comparison table above provides a list of lenders with a 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 loans.

      I hope this helps.

      Thank you and have a wonderful day!


    Default Gravatar
    BeNovember 12, 2017

    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

      Default Gravatar
      ArnoldNovember 13, 2017

      Hi Ben,

      Thanks for your inquiry.

      It would be difficult to get approved for a loan if you have a poor credit score. In most cases, lenders require good to excellent credit. There are quite a few that will accept applications from people with bad credit however this can cost higher interest rates and poorer terms. Thus, it is advisable to improve your credit before you borrow.

      There are lenders that may be able to consider you for a home loan with bad credit. You can press the “Go to site” button when you are ready, to proceed with your application. If the lenders here doesn’t work for you, 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.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      Hope this information helps


    Default Gravatar
    galinaJune 1, 2016

    what interest % on vacant land loan?
    How much i have to pay first deposit?

      Avatarfinder Customer Care
      MarcJune 1, 2016Staff

      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,

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