Quick answer
Vacant land can secure a private first mortgage, but each property is assessed case by case. Land earns no income and can take longer to sell, so the lender looks closely at zoning, access, services, any approvals and, above all, a realistic exit. Where it fits, loans run from $20k to $5m for 1 to 24 months, and interest can be capitalised so the land doesn't need to fund repayments.
Key points
- Vacant land and rural property are considered case by case
- Zoning, access, services and approvals all strengthen land as security
- Capitalised interest suits land, which produces no income to meet repayments
- A specific, evidenced exit matters even more than it does for built property
- Amounts
- $20k – $5m
- Land
- Considered case by case
- Term
- 1 to 24 months
- Interest
- Can be prepaid or capitalised
A block of land can be the most valuable thing a business owns and still be the hardest to borrow against. There’s no rent, no building to inspect and, often, no bank keen to lend on it. Yet land is where many business plans start: the depot site, the future subdivision, the industrial lot bought ahead of an expansion.
Private first mortgages over vacant land are possible. They are assessed case by case, and the owners who get a quick yes tend to be the ones who understand why.
Can you get a private business loan secured on vacant land?
Yes, where the land and the plan support it. Our lending partner fundU lends from $20k to $5m against residential, commercial and industrial property, and considers vacant land and rural property on a case-by-case basis.
“Case by case” isn’t a polite no. It reflects two honest facts about land:
- It produces no income, so there’s nothing on the property itself to meet repayments.
- It can take longer to sell, because the pool of buyers for a particular block is usually smaller than for a house or a leased shop.
The lender therefore leans harder on what makes land easy to sell and on how specific the exit is.
What makes vacant land stronger or weaker security?
| Feature | Stronger security | Weaker security |
|---|---|---|
| Zoning | Residential, commercial or industrial zoning that suits the obvious use | Zoning that restricts development or limits buyers |
| Approvals | Development approval or a registered plan of subdivision | No approvals and an uncertain planning path |
| Access and services | Sealed road, water, sewer and power at or near the boundary | Unmade access, no services nearby |
| Location | Established or fast-growing area with recent land sales | Remote, with few comparable sales |
| Size and shape | A standard, usable lot | Steep, irregular or encumbered by easements |
| Exit | Listed, under contract, or a clear refinance path | “We’ll sell when the market’s right” |
Easements, covenants and other registered interests matter more on land than on built property, because they can limit what can go there. A current title search shows them — in Queensland, for example, it shows the owners and registered interests including mortgages, easements, covenants, leases and caveats.
How do zoning and planning controls affect a land loan?
Zoning is the single biggest driver of who would buy your land and for how much. Before you enquire, pull the planning information for the block. In Victoria, a planning property report gives a quick summary for any address, including a zone map, maps of planning overlays affecting the land, whether it is in a designated bushfire prone area, whether it’s on the Victorian Heritage Register and whether it is in an area of Aboriginal cultural heritage sensitivity. Other states and councils publish comparable planning information.
Sharing that report with your enquiry answers the lender’s first questions before they’re asked, and shows you know what you own.
What do holding costs mean for a vacant land exit?
Land costs money to hold — council rates, land tax and loan interest — while it earns nothing. That’s why capitalised interest suits land particularly well: interest can be added to the loan so the land doesn’t need to fund monthly repayments, and the total is cleared at the exit. The prepaid or capitalised interest guide explains how that works.
Tax is worth a conversation with your accountant too. The ATO says you generally can’t claim a deduction for expenses to hold vacant land incurred on or after 1 July 2019, including interest, land tax and council rates. There are exceptions — for example corporate tax entities, and land used in carrying on a business — so the outcome depends on who owns the land and how it’s used.
Illustrative example: borrowing against an industrial lot
Illustrative example: A Sunshine Coast landscaping business owns a vacant industrial-zoned lot outright, worth about $1.2m, bought as the site for a future yard. The business needs $400k to fund equipment and clear an ATO debt. A 12-month private first mortgage of $400k — an LVR of roughly 33% — is secured over the lot, with interest capitalised because the land earns nothing. The exit is a bank refinance once the yard is built and the land is in use by the business, with the sale of the lot as a fallback. Illustrative only, not a quote or lending policy.
A modest loan against a well-located, well-zoned block is exactly the kind of land deal that fits. If yours sounds similar, send a quick enquiry with the address and zoning.
Is a vacant land loan the same as development finance?
No, and the difference matters. A private first mortgage over vacant land is a loan secured by the land as it stands today, for a business purpose — paying a supplier, clearing a tax debt, buying equipment, settling another purchase or holding the site while plans progress. It is not a construction loan, and it doesn’t release money in stages as building work is completed.
That distinction shapes how the loan is sized. The lender looks at the land in its current state, with its current zoning and approvals, not at what it might be worth once something is built on it. Value that depends on future works is part of your exit story, not part of today’s security.
Developers who want to fund a project using completed property they already own — rather than the bare site — should start with our page on developer finance secured on property.
What will the lender want to know about your land?
Come prepared with:
- the address and lot and plan details;
- the planning information and zoning for the block;
- any approvals, permits or subdivision plans;
- what services are connected or available;
- what’s owed against the land, if anything;
- the purpose of the loan and a specific exit, with evidence.
If you own other property, combining it with the land can strengthen the security — see using multiple properties as security. Developers holding sites for future projects should also read our pages on land bank loans and funding pre-construction costs.
See if you qualify against your land
Land deals reward preparation, and starting the conversation is low-risk. There’s no credit check when you enquire, and your enquiry isn’t distributed to a list of lenders — one specialist reviews the block and the plan.
Be accurate about the zoning, any approvals, who owns the land and what’s owed against it. A precise picture at the start is the quickest way to a dependable answer on a case-by-case asset.
Ask whether your land qualifies — the form takes about 60 seconds.
Frequently asked questions
Why is vacant land assessed case by case?
Land doesn't produce rent and the pool of buyers is usually smaller than for a house or a tenanted building, so it can take longer to sell. That makes the location, zoning and exit more important, and each block is judged on its own merits.
Can I borrow against a rural block or farmland?
Rural property is also considered case by case. Proximity to a town, access, water and the likely buyer pool for that kind of holding all shape the answer.
Does development approval make a difference?
Approvals and favourable zoning generally make land easier to sell and therefore stronger security. Land with no approvals can still be considered, but the exit needs to stand on its own.
Is this a construction loan?
No. This is a loan secured by the land for a business purpose, not progressive funding for building works. Developers looking at funding secured against existing property should read our property developer pages.
Can I claim the interest on a loan secured by vacant land?
It depends on your structure and how the land is used. The ATO generally denies deductions for holding costs of vacant land incurred from 1 July 2019, with exceptions such as companies and land used in carrying on a business. Ask your accountant how it applies to you.