What to know about buying a lifestyle block

If you want to trade the city for country living, you may be thinking about buying a lifestyle block.

But before you commit to a new way of life, there are a few things you’ll want to know.

What is a lifestyle block?

Most lenders define a lifestyle block as land between two and 10 hectares in size. Generally, if you need a ride-on mower for the lawn, it’s a lifestyle block.

When thinking about your finance options, it helps to understand how lenders might classify different types of lifestyle sections. Broadly speaking, there are three different types: those classified as residential, blocks with build plans, and blocks with no build plans.

Residential lifestyle blocks

Residential lifestyle blocks, which are within city or town boundaries, may require a smaller deposit. The amount you can borrow for this kind of land will depend on the lender but could be up to 80%.

When seeking a loan for a lifestyle block – of any kind – income generated from the land is unlikely to count towards affordability.

Buying a block to build

Most lenders will offer finance for land and construction. Lenders will generally seek a 20% deposit, but there are conditions on timeframes, valuations, and building costs.

Lenders typically prefer turn-key home and land packages, where the builder has completed pricing for the total build. If you’re planning for a prebuild or relocatable home, keep in mind that these have extra requirements.

Buying land with no build plan

Lenders consider lifestyle blocks more variable in price and more difficult to sell. As a result, they typically require a registered valuation before finance is available. Any shortfall in the valuation may require you to increase your deposit.

Talk to a local expert

With all these considerations, engaging the help of a mortgage adviser can make the process of financing your lifestyle block much simpler.

To find support for your lending needs, contact your local Mike Pero Mortgage Adviser.