What is a Land Loan?
A land loan is when someone borrows money from a lender to purchase a vacant block of land. This isn’t to be confused with a home-and-land package loan, which finances both the vacant land and the property you intend to build on it. For a land loan, the idea is that you will eventually build a house on it, but with no specific timeframe being determined. For now, you are purely seeking to gain ownership of a block of land.
Things to consider when looking at land loans
Typically, the land size (and therefore the price of the block) determines how much of a deposit you’ll need. Some lenders will loan you up to 95% of the property value, whereas larger lots might require a 20% deposit minimum.
What to expect regarding interest rates for your land loan
Most of the time, vacant land loan interest rates will be higher than that of a standard home loan. This is because land prices tend to fluctuate more than properties with existing homes on them, not to mention vacant land typically takes longer to sell. As such, lenders like to err on the side of caution by charging higher interest rates.
However, our team of expert mortgage brokers will take the time to understand your goals and ambitions for your vacant land, so that we can compare the market and find the most suitable land loan for your unique circumstances. We can also assist with off-the-plan home loans, guarantor home loans, owner-occupied loans and more.
Get in touch to arrange a one-on-one consultation today,