Building your dream home starts with finding the perfect block of land — an exciting step toward making that dream a reality.
But how do you borrow against bare land? Let’s break it down.
In many ways, getting a loan for land isn’t too different from buying a house. You still need to meet affordability criteria, and the bank needs to be comfortable with the land as security for the loan.
What changes?
It mostly comes down to two things:
- The type of land you’re buying
- What you plan to do with it
Both affect how much the bank is willing to lend you, known as the Loan to Value Ratio (LVR).
Types of vacant land:
- Serviced land: This means the land already has essential utilities like power, sewage, and water connected. You’ll often find this in subdivisions or new developments. For serviced land, most banks will lend up to 80% of the purchase price if it’s for your own home.
Non-serviced land: This land doesn’t yet have those connections. For these lots, banks usually reduce their lending to around 50% LVR, meaning you’ll need to come up with the other half as a deposit.
Planning to build?
If you want to borrow more than 50% on non-serviced land, some banks require proof that you intend to build within the next 12 months. This doesn’t have to be a signed contract — a quote from a reputable builder is often enough.
A few extra steps
Banks see bare land as a higher risk than land with a house, so you might face extra requirements like valuations or additional paperwork. But it’s definitely doable with the right guidance.
If you’re ready to buy land and build your future home, we’re here to help you navigate the process every step of the way.
