Can You Get a Mortgage to Buy Land?
Yes, though lenders are more careful with bare land than with houses. Expect to need a bigger deposit, and expect questions about what you plan to build and when.
Why lenders treat land differently
A house can be lived in or rented, so there's usually a ready buyer if a lender ever needs to sell it. Bare land earns nothing, costs rates, and has a smaller pool of buyers. Lenders manage that extra risk by lending a smaller share of the value.
How much deposit
There isn't one figure, but there is a pattern. The more ready-to-build and the more ordinary the section, the more a lender will advance.
| Type of land | What to expect |
|---|---|
| Serviced residential section in a town or subdivision, with title issued | The easiest to finance. Deposits are higher than for a house, and lower again if you'll build soon. |
| Section bought with a fixed-price build contract | Often assessed as a new build, which can mean a smaller deposit. See turnkey and house-and-land loans. |
| Lifestyle block, bare | A larger deposit, and limits on land size. |
| Rural or remote land with no services | Few lenders, big deposits. Past a certain size it's rural lending, not a home loan. |
| Section without its own title yet | Lenders approve subject to title. Money isn't advanced until title is issued. |
Ask about specific numbers when you have a section in mind, since each lender publishes its own maximums for vacant land.
What makes a section easier to finance
- Power, water and wastewater at the boundary.
- Legal road access and a separate title.
- A size and zoning that suit an ordinary house.
- A clean geotechnical report, with no instability or flooding notations on the LIM.
- A realistic plan to build, with a timeframe.
Covenants matter as well. Many subdivisions require you to build within a set period, to a minimum size or standard. Read them before you buy, because they decide what the build will cost.
Can you afford the land and the build?
A sensible lender looks ahead. If you can afford the section but clearly couldn't afford to build on it, expect questions. Before buying, get a rough build cost and have the whole project checked: land, build, site works, council fees and a contingency. Site works on sloping or poor ground are where budgets most often blow out.
While you hold the land you pay the loan and the rates, and often rent as well. Budget for that overlap lasting longer than planned.
From land loan to construction loan
When you're ready to build, the land loan stays and a construction loan is added. The lender values the finished house from the plans, then releases the build money in stages as work is completed. Your equity in the land counts as your contribution. Our guide to progress payments explains how drawdowns work.
This article explains how New Zealand lenders generally assess these situations. It is general information, not personalised financial advice, and lender policy changes often — check your own position with a registered adviser. Official sources: Reserve Bank of New Zealand for lending policy and the OCR, and Sorted.org.nz for independent government-backed money guidance.
Land loans: common questions
Found a section?
Tell us where it is, the price and whether you plan to build. We'll tell you what deposit lenders will want and whether the whole project stacks up.
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