Quick answer
Rural property, from a house on ten acres to a working farm, can secure a private first mortgage for business purposes. Each property is assessed case by case on the dwelling, improvements, access, water, zoning and how far it sits from a regional centre. Lending is lower on large acreage because these properties take longer to sell. We lend $20k to $5m with no formal valuation required.
Key points
- Lifestyle blocks, hobby farms and working farms can all be considered
- The house and the land closest to it usually carry most of the security value
- Lending is lower on large acreage than on a suburban home
- All-weather access, water and distance to town all shape the assessment
- Farm debt mediation laws in several states can apply to farm mortgages
- Security
- Rural property considered, case by case
- LVR
- Lower on large acreage
- Amounts
- $20k – $5m
- Valuation
- No sworn valuation — we assess value ourselves
A lot of Australian business owners live, or invest, outside the suburbs. The builder with a house on fifteen acres outside Maitland. The mechanic who bought a hobby farm near Toowoomba. The family that’s run cattle for three generations and now wants to fund a contracting business on the side. Each of them may have more equity in rural property than in anything else they own, and a private first mortgage can put it to work for the business.
Rural property is assessed case by case. It can secure a loan from $20k to $5m for business purposes, but lending is lower on large acreage than on a suburban home, and the details of the property matter more. This page explains how rural security is looked at and how to present yours. For lending by region, including country towns, see regional and rural property loans.
What kinds of rural property can secure a first mortgage?
Most do, with differences in how far the security stretches:
| Rural property | Usually viewed as | What makes it stronger |
|---|---|---|
| House on a small lifestyle block near a town | Close to standard residential | Sealed road, town water or good tanks, short drive to services |
| Hobby farm with house and sheds | Good, case by case | Quality dwelling, useful improvements, reliable access |
| Larger grazing or cropping property with homestead | Considered, lower lending | Proven productivity, all-weather access, a deep local buyer market |
| Bare rural land, no dwelling | Assessed conservatively | Zoning that allows a dwelling, services nearby |
| Rural property in a small, remote district | Case by case | Pairing it with property in a larger centre |
The pattern is simple: the closer the property is to what a wide range of buyers want, the further the security goes.
Why do the house and nearby land carry most of the value?
On many rural properties, a large share of the value sits in the dwelling and the land immediately around it: the house, sheds, yards, garden and access. The back paddocks add value too, but they appeal to a narrower group of buyers, usually neighbours or other producers.
That’s why two properties with the same total value can support very different loans. A modern home on 20 acres an hour from a regional city may be stronger security than an older homestead on 2,000 acres three hours out, even if the larger holding is worth more. It’s also why our lending is lower on large acreage.
There’s no sworn valuation. We assess the property ourselves, so there’s no inspection for you to book or pay for. Good photos, the rates notice and a short description of improvements go a long way.
What do we look at on a rural property?
Expect questions about these, and have answers ready:
- Title. A title search shows the registered owners and registered interests such as mortgages, easements, covenants, leases and caveats. Rural properties often span several titles; list them all.
- Access. Sealed or all-weather road frontage, or a registered right of way. Seasonal access is a common sticking point.
- Water. Town water, bores, dams, tanks, and any separate water entitlements.
- Dwelling and improvements. Age and condition of the house, sheds, fencing and yards.
- Zoning. Whether the zone allows a dwelling and the current use.
- Location. Distance to the nearest regional centre and how active the local property market is.
If water entitlements are part of your story, tell us early. They can be held separately from the land title, may be assessed on their own terms, and may already be pledged to another lender.
How does farm debt mediation affect a farm mortgage?
If the security is a working farm, there’s one extra layer to understand before you sign. According to the federal agriculture department, four states (New South Wales, Victoria, Queensland and South Australia) have farm debt mediation written into law, while Western Australia’s scheme is voluntary. Under the New South Wales scheme, a lender wanting to enforce a farm mortgage first has to offer mediation in writing, and the farmer has 20 business days to reply.
For a borrower, that’s a safeguard. For a lender, it adds time to any recovery, which is one reason farm security is weighed carefully. Your solicitor can explain how your state’s scheme applies. Our farming and agribusiness page covers farm-business borrowing in more depth.
Illustrative example: a lifestyle block funds a building business
A Hunter Valley builder and his partner own their home on 12 hectares outside Cessnock, with $280k owing to a bank. His building company needs $300k to cover cost overruns on two fixed-price jobs and pay an overdue tax debt, and the bank won’t increase the loan while his latest accounts show a loss.
Illustrative: the property, with a modern four-bedroom home, large shed and sealed road access, is assessed at around $1.25m. A private first mortgage of $610k pays out the bank’s $280k, funds the $300k and covers costs. Interest is capitalised for the first 6 months, so there are no repayments while the jobs finish and the claims come in. The exit is a refinance to a bank once the two projects complete and the next accounts show the recovery. Figures are illustrative only.
Check your loan in about a minute if you’re in a similar position.
What business purposes suit rural security?
Any genuine business need can be funded, whether the business runs from the property or from a shop in town. Common examples we see from rural owners:
- Contracting and trade businesses buying machinery, trucks or materials for a large job.
- Transport operators replacing a prime mover or covering fuel and wages through a slow patch.
- Tax debts, paid directly to the ATO at settlement.
- Buying business premises in town, or settling a purchase where bank finance has stalled.
- Farm businesses funding inputs ahead of a harvest or sale; see farming and agribusiness for that side.
What these loans can’t fund is personal spending, a new family home or a lifestyle purchase. The purpose has to be the business.
How can you strengthen a rural application?
- Offer a second property if you have one. A house or unit in town alongside the rural property often makes the whole loan easier. See using multiple properties as security.
- Borrow what you need, not the maximum. A modest loan against a large property is a far easier decision.
- Show the access and improvements. Photos of the road, the house and the sheds answer many questions before they’re asked.
- Plan a realistic exit timeframe. Rural sales take longer; build that into the plan.
- Clear anything overdue. Rates or land tax arrears can be paid at settlement, but mention them upfront.
If the block is bare land with no house, our first mortgage on vacant land page is also worth reading.
When isn’t rural property the right security?
- When the only exit is a quick sale of a large, remote holding.
- When access is seasonal and the property can be cut off for part of the year, unless other security is offered alongside.
- When the funds are for personal use. These loans are for business purposes only.
Own rural property with equity? See if you qualify
Equity on the land is real equity, even if a bank’s checklist struggles with it. If you own acreage, a hobby farm or a farming property and need funding for your business, it’s worth a conversation.
The loan check takes about 60 seconds and won’t affect your credit score. Your details come to one direct lender, and is never passed around to a panel of strangers who all ring the house. A specialist who understands rural security reads your enquiry and calls you. Describe the property accurately, including access, dwelling and what’s owing, and we can give you a straight answer the first time.
Frequently asked questions
Can I use my house on acreage as security for a business loan?
Yes. A home on a lifestyle block is one of the most common rural securities we see. The house, sheds and surrounding land are assessed together, and the loan funds your business, whether that business is on the property or in town.
Why is lending lower on large acreage?
Because large rural holdings have fewer buyers and take longer to sell than a suburban home. Lending is set so the loan can still be repaid from a sale in a slower market, which means a lower ceiling than on standard residential property.
Can a working farm secure a loan for a non-farm business?
It can. The farm is the security and the business purpose can be anything legitimate, such as a contracting business, a transport operation or a town-based shop. Farm debt mediation laws may still apply to the mortgage, so talk to your solicitor.
Does the property need a house on it?
No, but a dwelling usually helps. A house with power, water and good access appeals to far more buyers than bare paddocks, which makes it stronger security. Vacant rural land is assessed more conservatively.
Do water entitlements count as part of the security?
Water entitlements can be held separately from the land title, so they're assessed on their own terms. Tell us about any entitlements when you enquire, and whether they're already pledged to another lender.
What exit works for a rural property loan?
The usual exits are a bank or rural lender refinance once the business's figures support it, the sale of the property or part of it, or a large receipt such as a harvest or contract payment. Allow realistic time for a rural sale.