From learning all about land loans and how they differ from home loans, to mastering the ins and outs of stamp duty calculations, and even discovering what’s included in a house and land package, we’ve got you covered. But first, let’s get to the good stuff. How much money do you need to make your land-owning dreams a reality?

Buying Land: What you need to know

What is a land loan?
Like purchasing an already built home, buying land can be achieved by paying the full amount upfront or by obtaining a loan. The upfront cost, however, varies depending on which route you choose.

If you opt for a land loan, also referred to as a vacant land loan, you’ll receive funds specifically for purchasing a plot of land. The beauty of these loans lies in their flexibility, as there are no strict timelines to adhere to. Whether you’re eager to start building your dream home right away or you want to wait for personal reasons, the decision is yours to make.

For some landowners, paying off their land loan first is a priority before starting the building process. Meanwhile, others have both the funds and the desire to jump right into a custom build project as soon as possible. Regardless of your preference, we’re here to guide you every step of the way.

What’s the difference between a land loan and a home loan?

Do you find the terms “land loan” and “home loan” confusing? Let’s clear things up.

A home loan, also known as a mortgage, is money lent by banks or financial institutions for the purpose of purchasing an already constructed home.

If you’re planning to build a new home, a construction home loan is the way to go. This type of loan is designed for the sole purpose of funding the construction of a new home. The interest is charged only on the amount used during the construction process.

On the other hand, a land loan is specifically intended to finance the purchase of vacant land. You receive the entire loan amount at the beginning, similar to a home loan. This is different from a construction loan, where funds are distributed in instalments based on the project’s timeline, which can range from 12 to 18 months.

In short, a land loan and a home loan differ in their intended purpose, and a construction home loan is designed for those planning to build a new home.

Factors to consider in getting a land loan

When deciding whether to approve your loan application, lenders will consider several factors. These may include the size of the land you’re looking to purchase, its location, your intended use for the land, the availability of service infrastructure in the area, and whether the land is registered or not. All of these factors can play a significant role in whether your loan is approved, so let’s break each one down.

✔️Land Size 

The land size will impact the amount of deposit you’ll be required to pay in order to secure the loan. Generally, lenders will have their own specific requirements, but it’s common to be able to borrow up to 95% of the property’s value.


The location of the land you’re looking to purchase is also an important factor in securing a land loan. The lender will want to know if the land is in a metropolitan or regional area. This is because the land will be subject to different local council regulations and restrictions depending on where the property is situated.

✔️Intent of land purchase

Whether you’re buying and holding for investment purposes or looking to build a new home on the land in the future, the lender will want to know. Generally you’ll be considered as a lower-risk applicant if you plan to build sooner or later, rather than having no plans to build at all.

✔️Availability of services 

The lender may consider the availability of service infrastructure and facilities in determining your land loan application. Examples of services include water, sewerage, electricity, internet infrastructure, road accessibility and more.

✔️Registered land vs unregistered land

Registered land means the necessary infrastructure like roads and electricity are connected and ready for you to build on. Unregistered land for comparison do not have this – lenders generally won’t approve land loans for unregistered land.

✔️Should you apply for a land loan?
There is no one answer for everyone. You will need to take into consideration your financial position, preferences, and personal goals. We highly recommend you seek professional advice from an experienced and certified financial institution.

Feel free to reach out to our in-house team, Westgate Financial Services, for more in depth knowledge and tailored solutions advice.

In general, take into consideration some of the following info:

  • Land loans require larger deposits than other forms of home loans: at least 5%.
  • Stamp duty is applicable to land loans if you’re a first-time buyer.
  • Land loans are not tax deductible for investors.

How do deposits and interest rates work with land loans?
The deposit required to secure a land loan will depend on the financial institution you’re seeking the money from and their own risk assessment process and criteria. Deposits required can range from 5% to 20%.

When it comes to interest rates, keep in mind that vacant land loans tend to come with higher interest rates. The reason behind this is pretty simple: land loans are a bit riskier for lenders. Land prices can be all over the place, and selling empty plots takes longer than selling established homes, which makes lenders a bit nervous.

What’s the deal with stamp duty?
Stamp duty is a tax imposed by the government on specific transactions and documents, and both land loans and home loans are subject to this levy.

The stamp duty amount is always calculated as a percentage of the property price, meaning that lower property prices will result in lower stamp duty costs. We cover the ins and outs of stamp duty here. 

How do house and land packages work?

A house and land package is a combined offering of vacant land and a newly constructed home sold together as a single package deal.

The main appeal of a house and land package is the ease and convenience it offers. If you were to tackle these components separately, you would have to identify and purchase land, obtain home designs, and then engage a construction company. With a package deal, you can choose from several pre-designed home plans that are tailored to different properties on offer, ultimately selecting the one that best aligns with your personal preferences.

Many house and land packages, including those available through New Generation Homes, are curated to offer options in premium estates or highly sought-after suburbs and areas.

Enjoy the journey to your new home and land with New Generation Homes

At New Generation Homes, we’re not just all about the nitty-gritty of land loans, home loans, and construction loans. We offer complete, end-to-end house and land packages that make the home-buying process a total breeze!

Our team of experts will be your trusty guides throughout the entire journey, making sure you can kick back, relax, and enjoy the ride. And if you have any questions along the way, we’re here to answer them all! Our builders at New Generation Homes and lending specialists at Westgate finance work together to keep you feeling informed, comfortable, and downright excited about the future ahead. Get ready to find your dream home with us!

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