Vacant Land Low Doc
From a bank’s point of view, vacant land is a riskier type of security than a normal house or unit.
Why? Quite simply, there are less people who want to buy vacant land, so blocks of land tend to have extended selling periods or have fluctuating values.
Lenders are already conservative when assessing low doc loans, so when you tell them that you are buying land, that may be the straw that breaks the camel’s back.
As a general rule, normal sized blocks of land in metropolitan areas are fine for most of our lenders.
It’s the regional, rural and remote locations that can be difficult to finance.
How much can I borrow?
You can borrow a maximum of 80% of the value of your land. The majority of lenders reduce this amount to 60% (or less) if you are buying a block of land in a remote location.
However one of our banks can lend up to 80% for almost all types of vacant land, in any location in Australia.
Does the size of my land matter?
- Up to 2 hectares: You can borrow up to 80% of the value of your land.
- 2 – 11 hectares: You can borrow up to 80% of the value of your land, through some lenders only.
- 11 – 50 hectares: You can borrow up to 60% of the value of your land, through some lenders only.
- Over 50 hectares: You can borrow up to 50% of the value of your land on a case by case basis.
Please call us on 1300 889 743 or enquire online to find out if we can finance your land.
Will the bank force me to build?
The majority of lenders will require you to start building on your land within two years. Many people do not intend to build on their land but instead want to hold onto it for the future.
In these cases we can help you find a lender that does not have any construction time frame restrictions.
What happens when you decide to build?
When you do decide to build, your land loan will be converted into a low doc construction loan. This is a simple process whereby we submit a loan increase to your lender along with the council approved building plans, specifications and building contract.
If your lender doesn’t lend for the type of construction you have chosen then we can refinance your loan to another lender that will help.
What if you can't access your land?
Lenders will not lend a cent against a property unless it has good access. If you have to go through a neighbour’s land
to get to your property, then no lender can help you unless there is some sort of legal right of access to your property.
From a lender’s point of view, nobody would want to buy a block of land that can’t be accessed!
Some properties which are remote and only accessible by forest track through crown land, such as a state forest, are more difficult to finance.
However, if there is legal access that does not rely on a lease that could theoretically be cancelled, then we can arrange a low doc loan for most self employed borrowers.
If your property can only be accessed by a dirt road that is poorly maintained, then during bad weather your land may become completely inaccessible! The majority of banks will decline home and investment loans with these properties as security.
Does the zoning of the land matter?
Land inside major capital cities and regional locations would have a standard residential zoning. This is acceptable to almost all lenders. Rural areas have zonings such as rural-residential, rural and farm zoning.
The majority of low doc lenders will lend for rural residential properties as long as they are in a major town with a population of more than 5,000 people. Rural and rural-residential zoned land in areas outside of major towns can be financed as long as they do not exceed 50 ha.
Farm zoned land is much more difficult. If the property is not being used as a farm and can be used for normal residential housing then there is normally no problem. Low doc loans are generally unavailable for land that can only be used as a commercial farm.
Will I pay a higher rate because I'm buying land?
Almost all of our lenders have the same interest rate for land and construction low doc loans as they do for normal low doc loans.
What are the common pitfalls?
Many lenders will not accept acreage sized vacant land. Try to buy a smaller block.
The majority of non-conforming lenders will not accept vacant land as a security. This means it can be extremely difficult to purchase vacant land if you have a bad credit history.
The non-conforming lenders that do accept vacant land will not, however, accept construction as a low doc loan purpose. You will need to refinance when you decide to build.
How do I apply for a vacant land low doc loan?
Our mortgage brokers are experts in low doc financing. Send us an online enquiry or call us at 1300 889 743 and we will be in touch with some free quotes from leading bank and non-bank lenders that specialise in low doc and lite doc lending.Source: www.homeloanexperts.com.au