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Should you apply a vacant land loan or construction loan?


Whether you are buying a vacant land for investment or maybe one day in the future you want to build your own house and live there, a vacant land purchase can be financed by a range of mortgages.

If you are planning to build immediately or very soon, a construction loan might be the best option. Depends on which lenders and also depends on whether the property will be owner occupier or investment, the lenders normally need the construction to start within a specified time, usually between 1 – 3 years. A construction loan is drawn down segments of the loan amount in the stages depends on the stages they are now.

If you decided not to start building any sooner, then the vacant land loan is a better choice for your situation. Most lenders do offer a vacant land loan with up to 30 years loan term with LVR up to 90% of Land value and some lenders can finance further up to 97% of LVR. Depends on lenders, normally if the LVR (loan to valuation ratio) is higher than 80% or 85% some lenders required the borrower to pay LMI (Lender’s mortgage insurance)

If you have found a perfect location for your dream home and you haven’t ready to build it yet, the next step is to speak to Kevin on 0415820016 about the different types of loans that can finance the purchase.





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