Hobby Farm Loans

Discover your hobby farm borrowing power

• Land size up to 10 ha: You can borrow up to 95% of the property value.
• Land size up to 50 ha: Up to 90% of the property value if you are close to a major town, otherwise you can borrow 80% of the property value.
• Land size up to 60 ha: You can borrow up to 80% of the property value.
• Land size up to 100 ha: You can borrow up to 70% – 80% of the property value on a case-by-case basis.
• Land size over 100 ha: These farms may not be considered as “hobby farms” by the banks. Please discuss your situation with us if you believe your property is not “income-producing” (see below definition).
• Investment: Borrowing is restricted to 90% of the property value, but you may be able to borrow up to 95% if the property is less than 2 ha.
• Vacant land: Borrow up to 95% of the property value depending on the size of the vacant block. Please see the vacant land loan page for specific approval criteria.
• Commercial farms: We can get you a loan to buy an agricultural business (agribusiness), including equipment finance. Please discuss your situation with our mortgage brokers.
• Guarantor loans: Borrow up to 100% with select lenders only.
• Discounts: Competitive professional package and basic loan discounts are available for blocks that are up to 100 ha in size.

The main problem banks have with financing a hobby farm is to do with the improvements that typically need to be undertaken and what the farm is used for. Please read below for more information.

Please call us on 1300 889 743 or enquire online, and one of our mortgage brokers will let you know which lenders will accept your hobby farm.

How much can you borrow?

• Land size up to 10 ha: You can borrow up to 95% of the property value.
• Land size up to 50 ha: Up to 90% of the property value if you are close to a major town, otherwise you can borrow 80% of the property value.
• Land size up to 60 ha: You can borrow up to 80% of the property value.
• Land size up to 100 ha: You can borrow up to 70% – 80% of the property value on a case-by-case basis.
• Land size over 100 ha: These farms may not be considered as “hobby farms” by the banks. Please discuss your situation with us if you believe your property is not “income-producing” (see below definition).
• Investment: Borrowing is restricted to 90% of the property value, but you may be able to borrow up to 95% if the property is less than 2 ha.
• Vacant land: Borrow up to 95% of the property value depending on the size of the vacant block. Please see the vacant land loan page for specific approval criteria.
• Commercial farms: We can get you a loan to buy an agricultural business (agribusiness), including equipment finance. Please discuss your situation with our mortgage brokers.
• Guarantor loans: Borrow up to 100% with select lenders only.
• Discounts: Competitive professional package and basic loan discounts are available for blocks that are up to 100 ha in size.

The main problem banks have with financing a hobby farm is to do with the improvements that typically need to be undertaken and what the farm is used for. Please read below for more information.

Please call us on 1300 889 743 or enquire online, and one of our mortgage brokers will let you know which lenders will accept your hobby farm.

What is a hobby farm?

Generally speaking, a hobby farm is a rural property used for the purposes of small-scale farming.

Essentially, the farm is designed for personal fulfilment or self-sustainability rather than for the purposes of turning a profit on a commercial basis.

In saying that, small-scale working farms have been known to provide diligent owners with a second source of income.

Some of these small-scale agricultural operations are the same for a commercial farm and can include such activities as growing fruit and vegetables or raising farm animals like cows, chickens, sheep and pigs.

Want to know more about hobby farms?

Check out the ‘What Is A Hobby Farm?’ page.

When is a rural property ‘income-producing’?

The test for most valuers is whether there is an ability to offset business losses from a farm against other income.

Typically, this is where:

• Turnover from the business activity is at least $50,000.
• The business has produced a taxable profit in 3 of the last 5 years, including the current year.
• The value of the property carrying on a business is at least $500,000.

For example, you will often find hobby farms with cattle or agistment (the contract for taking in and feeding horses or other cattle) where the owners want to earn at least $20,000 to get the ability to claim their losses from the farm against other income forms.

Do you intend to develop the property for significant agricultural activities?

Do you need some of this income to prove that you can afford the loan?

If so, it’s likely that the valuer will class the property as income-producing.

Are they a good investment?

It helps to get advice from a mortgage broker that specialises in hobby farms before deciding to apply for a home loan.

They can help build a case that addresses the bank’s requirements on land size, location and how much income may be generated from the operation.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers who specialises in hobby farms can help you to apply for a home loan.

What should I look out for in a hobby farm?

Check that the land is suitable for what you’re planning to use it for

This can include fertile soil for growing produce and, for the purposes of caring for animals, fields for grazing and clear access to water sources, such as ponds and lakes.

If you’re buying vacant land then check with council to confirm that you are allowed to build a dwelling on the property.

Check with council regarding zoning and infrastructure projects

Zoning changes all of the time and planned or ongoing infrastructure or commercial projects can have a major affect on your ability to run a hobby farm. For example, a new motorway can affect the peace and quiet that you were after in the first place, while, from a practical perspective, a new mining or gas project can have a massive effect on the health of the surrounding environment and your ability to grow produce.

In terms of actually getting approved for a hobby farm loan, did you know that there are lending restrictions on bushfire prone properties, many of which are located in the same rural areas as lifestyle farms?

Check that you’re getting what you pay for

Sometimes the farm will come with everything you need including built-in stables or houses for animals, troughs, feeding dispensers and fences. That’s great but it also means you have to ensure that you’re getting what you pay for, that is, making sure all of the amenities are in good condition and to code.

Legal requirements

Be aware of local council restrictions as well as state and federal laws and licensing requirements regarding the use of land and owning farm stock.

For more resources and tips on lifestyle farms, go to farmstyle.com.au.

What do the banks assess?

Hobby farms can be assessed in several ways by our banks, depending on the location and the size of the property.

Land size: There is technically no maximum land size. However, to qualify with most banks the land must be less than 10ha. Some banks can consider up to 50ha and one can consider any size land as long as the property is not being used for business or income-producing purposes.

Banks are likely to be very conservative with properties over 200 hectares.

Location: Each lender has their own postcode restrictions. At least two of our lenders have no postcode restrictions at all, although, remote properties will always be difficult to finance.

Access: The land must have easy access using an all-weather road. Dirt roads are fine as long as they are well maintained.

Services: The land must be within range to be connected to the electricity grid without excessive costs or have solar power. Town water and sewerage services aren’t required as many Australian properties have tank water or septic tanks instead. Fully-serviced and partially-serviced blocks are both acceptable.

Zoning: Land can be zoned rural, rural residential or the equivalent for your state. Be careful with land that is zoned industrial, commercial or for farm use as they are generally not accepted or may be considered as a commercial farm unless it’s clear they can’t be used as a home. A good rule of thumb is that if the land you are buying is subject to GST then it would be considered as a commercial property by the banks.

Land use: The land can only be used for personal or investment purposes, not as a commercial farm. Hobby farms with minor farm improvements and that don’t produce income from farm production are usually accepted.

Why are the banks so conservative?

During times of drought or during economic downturns, farms tends to fall in value and take longer to sell. This is particularly true in country areas and remote locations where land prices fluctuate more often.

Normal houses on the other hand have more potential buyers and so tend to sell much faster.

Because of this higher volatility, banks tend to be more conservative when approving a home loan for hobby farms.

In addition to this, banks consider commercial farms to be businesses, not a lifestyle purchase so they can only be considered for more expensive commercial loans and business loans.