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Caveat loans

Can I get a caveat loan on vacant land?

Updated Sept 2026 · Reviewed by The Lienhouse team

Yes, but at lower leverage than improved property. Vacant land earns no income, takes longer to sell and is harder to value, so lenders commonly cap caveat loans against it around 50% to 60% of value, and lower for rural or unserviced blocks. Zoned, serviced, metropolitan land with a clear exit is the strongest case.

Key takeaway
Vacant land can secure a caveat loan, typically at a lower LVR than improved property; zoning, services, location and a defined exit decide how much and at what price.

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Land is good security with one drawback: it does nothing while it waits. There is no rent to service debt and no building for a buyer to move into, so the lender is relying entirely on the land finding a buyer at the valued price within a reasonable time.

What lenders look at

  • Zoning and approvals. Residential or commercial zoning with a current development approval is the strongest. Rural or future-urban zoning is weaker.
  • Services and access. Sealed road frontage, power, water and sewer. An unserviced block sells to a narrow market.
  • Location. Infill metropolitan lots clear quickly. Fringe and regional land takes longer, and the LVR drops to reflect it.
  • Size and price point. A $600,000 suburban lot has hundreds of potential buyers. A $6,000,000 englobo parcel has a handful.
  • Encumbrances. Easements, contamination, flood overlays and heritage controls all affect value.

Indicative leverage

Improved metropolitan property supports a caveat loan up to around 65% combined LVR. For vacant land, expect roughly 50% to 60% on good metropolitan sites and less outside the cities. If there is an existing mortgage over the land, that comes off first. The detail for land as security is on the loans against vacant land page.

The exit matters more than usual

Because the land produces no income, the exit has to be an event: a sale, a construction facility that takes out the land debt, a refinance, or funds from elsewhere. A developer waiting on an approval that would lift the value should say so, with the timeline - it is a legitimate exit if it is realistic. A plan to hold and hope is not.

When another product fits better

For holding a site through approvals over 6 to 24 months, a first mortgage land loan is cheaper than a caveat loan and built for the purpose. A caveat loan suits the short, urgent need: a deposit on the next site, an ATO bill, a consultant milestone, with the land debt cleared when the construction facility settles.

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FAQ

Does the land need a development approval?

No, but an approval or favourable zoning supports the valuation and widens the buyer pool, which improves both the LVR and the rate.

Can I use a caveat loan to buy land?

A caveat loan is normally secured against property already owned. For a purchase, a first mortgage land loan is the usual structure.

Is a full valuation always needed on land?

Almost always. Land has fewer direct comparables than housing, so desktop figures are unreliable and lenders want a valuer's report.

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Raise capital against land you already hold.

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