Quick answer
A private land loan is secured by vacant land or a development site and is used to buy, settle, hold or release equity from land for a business purpose. Banks are cautious with land because it produces no income, so private lenders focus on the land's value, zoning and the exit. Loans run from $20,000 to $5,000,000, typically at a more conservative LVR than built property.
Key points
- Vacant residential, commercial, industrial and development land considered
- Fund a purchase, a settlement shortfall, holding costs or an equity release
- Zoning, access, services and approvals shape the assessment
- More conservative LVR than houses or commercial buildings
- Exit is usually a sale, a construction loan or a refinance once approvals are in
Why land is a special case
Land is the raw material of every property project, yet it is one of the hardest assets to finance. A vacant block produces no rent. Its value depends on what can be built on it, which depends on zoning, overlays and council approvals. The pool of buyers for a development site is smaller than for a house, and a sale can take longer. Banks respond by asking for large deposits, detailed feasibility studies or both.
A private land loan takes a simpler view: what is this land worth on today’s evidence, what could hold its value back, and how will the loan be repaid? Those questions can be answered quickly with title searches, planning information and comparable sales.
What land loans are used for
- Buying land when the bank will not fund it, or will not fund it in time. See development site purchases.
- Covering a deposit or shortfall on a land purchase, secured over other property.
- Holding land while a development application or rezoning progresses. See land awaiting rezoning or DA.
- Releasing equity from land already owned to fund the business or another project.
- Refinancing an expiring land loan from a bank or another private lender.
How land is assessed
No valuation is needed before approval. The lender reviews:
| Factor | Why it matters |
|---|---|
| Zoning | Defines what can be built and therefore the land’s value |
| Approvals | An approved DA or subdivision usually lifts the value and the exit options |
| Services | Water, sewer, power and road access affect cost to develop |
| Size and shape | Frontage, slope and access determine yield |
| Overlays and constraints | Flooding, bushfire, heritage, easements and contamination |
| Location and buyer market | How quickly the land could be sold if needed |
Because of these uncertainties, land LVRs are more conservative than for built property. Adding another property as security can raise the amount available. Our guide on vacant land as security explains how lenders weigh each factor.
Interest and holding costs
Land produces no income, so how interest is handled matters. Prepaying interest from the advance or capitalising it means there is nothing to pay while the land is held. That suits developers waiting on approvals and businesses holding land for future expansion. Remember to budget for council rates, land tax and insurance as well.
Ask what your land could support before you commit to a contract.
Exit strategies for land
- Sale of the land, either as-is or with approvals that add value.
- Construction loan once approvals are in place, which repays the land loan at the start of the build.
- Refinance to a bank once a DA is approved or the land is income-producing.
- Another asset such as the sale of a different property or business.
The exit determines the term. Approval timelines are notoriously hard to predict, so build in a generous buffer. The loans are flexible and can stay in place if council takes longer, but a realistic plan from day one avoids awkward conversations later.
An illustrative land loan
Illustrative only. A builder identifies a corner block suitable for four townhouses. The vendor will accept a strong price for a six-week settlement. The bank wants a full feasibility and a 40 per cent deposit. The builder offers his family’s investment property as additional security, and a private first mortgage over both settles the land on time. Interest is capitalised while the DA is prepared and lodged. Ten months later, with the approval issued, a construction lender refinances the land and funds the build, repaying the private loan in full.
Rural, lifestyle and industrial land
Rural and lifestyle land is considered case by case. Proximity to a regional centre, access, water and the size of the buyer market all count. Industrial land in established estates is often viewed favourably because demand for industrial space has been strong in many markets. Each is assessed on current evidence.
Mistakes to avoid with land loans
- assuming the land is worth the price you paid if the market has moved
- underestimating approval times and setting a term that is too short
- forgetting rates, land tax and insurance in the holding budget
- ignoring overlays that could limit what can be built
- relying on a construction loan exit without checking the construction lender’s requirements early
What to prepare
- contract of sale or title details
- zoning and planning information, including any DA lodged or approved
- any reports already prepared, such as surveys or feasibility studies
- details of other property offered as security
- a plain description of the exit and the expected timeline
Land across different states
Each state runs its own planning system and land registry, and transfer duty is set by each state revenue office. In New South Wales, planning information is available through the NSW Planning Portal; in Queensland, transfer duty is administered by the Queensland Revenue Office; in Western Australia, titles are held by Landgate. These differences rarely change whether a loan is possible, but they do affect timing, especially for approvals and settlement. Give your specialist the exact address on the first call so the right searches can start straight away.
Turn land into an asset you can use
Land can be a powerful source of security if the loan is structured around its realities. Tell us the site, its zoning, any approvals and how you plan to repay, and a specialist will tell you what is achievable. There is no credit check when you first enquire, your details are kept within our team, and accurate planning information helps us give you a firm answer faster. Make a land loan enquiry.
Frequently asked questions
Why are banks reluctant to lend on vacant land?
Land earns no income, can take longer to sell and its value depends heavily on zoning and approvals. Banks often require a large deposit or decline outright. Private lenders assess the land on its merits and the exit.
Can I borrow against land I already own?
Yes. Land owned outright or with a small loan can secure a business loan, such as a deposit on another purchase or working capital.
Can a land loan pay for development approval costs?
Holding costs, consultants and approval fees can form part of the purpose, provided the exit is clear: usually a sale of the approved site or a construction loan.
Is rural land accepted?
Rural and lifestyle land is considered case by case, often at a lower LVR. Location, access and the buyer market matter.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.