Can I get 95% loan for my hobby farm?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: Can I get 95% loan for my hobby farm?

Post by Otto Dargan »

Hi Super Franky,

It’s great to know that you have found the land.

However, the area you are trying to buy falls in the high-risk category and it could limit you're borrowing to 80% of the property value. However, some lenders don't have any postcode restrictions at all so you could potentially borrow up to 95% of the property.

Also, check out the postcode calculator to get a pretty accurate idea for lending policies and restrictions for the particular area that you’re looking to buy a hobby farm.
For hobby farms less than 10 hectares, you can borrow up to 95% of the property value. But please note that in Victoria, rural properties have been classified as:
  • Rural Living Zone (RLZ) VIC: These are usually used for residential purposes with minor agricultural activities.
  • Rural Conservation Zone (RCZ) VIC: These are rural areas of environmental importance. Here, a single house can be built, and are typically acceptable for lending purposes.
  • Rural Activity Zone (RAZ) VIC: These lie under flexible zoning which allow agricultural, residential, tourism and business use. The usage of the property will determine how much you can borrow.
  • Farming Zone VIC: Sometimes these are hobby farms and other times commercial farms. The land size and usage will determine your borrowing power.
For other specific restrictions, it’s essential you speak to the local council.

If you can tell me a little more about the services connected to the property, I can give you some idea of your ability to get approved for a hobby farm loan.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get 95% loan for my hobby farm?

Post by Otto Dargan »

Hi Super Franky,

Yes, there can a huge difference in getting approved depending on whether land is fully or partially-serviced. The lenders take into account of the services available to the rural property loans while conducting a valuation of the property. Also, they take into account the following:
  • Location: Remote locations can sometimes be difficult to finance because, again, banks take a conservative approach to property that has limited market appeal.
  • Good access via roads: Banks prefer properties with easy access and all-weather roads. They don’t necessarily have to be sealed. Dirt roads may be acceptable as long as they’re in good condition.
  • Services connected: When it comes to electricity, water and sewerage connections, partially-serviced rural properties may be accepted. For example, rural properties with solar power will sometimes be accepted if the property isn’t connected or is at least within range of the electricity grid.
If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a hobby farm loan or not.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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