Buying vacant land: how land loans work

Financing land is not the same as financing a house. Lenders see vacant land as easier to walk away from, so deposits, rates and conditions all run a little tighter. Here is what changes and how to plan around it.

What lenders look at

• Size: under 2 hectares is treated like a normal residential purchase at most lenders. Larger blocks push you toward rural policy with bigger deposits.
• Location and services: sealed road access, power and water matter. Remote or unserviced blocks cut the lender list quickly.
• Intent: lenders like a plan to build. Some cap the loan term or LVR if there is no building timeline.

Deposits and rates

For a standard residential block, many lenders still lend 90%, some 95% with LMI. For larger or rural land, expect 20 to 30% deposits. Rates on land-only loans typically sit slightly above home loan rates until you build, which is one reason many buyers prefer a single land-plus-construction package.

Land now, build later

Buying land first and building in a year or two is common and sensible. Structure matters though: if you finance the land with lender A and later want your construction loan with lender B, you may face a full refinance mid-project. If a build is on the horizon, choosing a lender strong in construction lending from day one avoids that.

First home buyer building?

House-and-land packages can qualify for the First Home Owner Grant, duty concessions on the land, and the Home Guarantee Scheme, a combination that can be worth tens of thousands. See what first home buyers can claim.