Direct answer
A land bank loan funds the holding of undeveloped or development-stage land — englobo or DA-stage sites that generate little or no income — while planning approvals progress or market timing improves. In Australia it is secured by a first mortgage over the land, typically runs one to three years, and is arranged through private lenders and specialist funds rather than mainstream banks, given the absence of income and the extended, uncertain holding period.
Who uses it and why
Land banking is a specific stage of the development cycle: a developer or land banker has identified a site with future potential — through rezoning, subdivision, or simply market growth over time — but the land is not yet ready to build on, and it produces no rental income to service a conventional loan in the meantime. A developer holding a large parcel through a rezoning application needs funding that does not assume income the land cannot generate. An investor who has secured a strategically located site ahead of infrastructure or population growth needs a facility structured around a multi-year holding period rather than a standard purchase loan.
This is patient capital by nature, and both the borrower and the lender understand the loan is being serviced from sources other than the land itself — typically the borrower's broader business or investment income — until the land is developed, rezoned, subdivided or sold. Typical borrowers are developers acquiring sites ahead of a construction phase, and land bankers taking a longer-term view on location and future value.
The holding period is usually the single hardest variable to pin down, since planning and rezoning timelines routinely run longer than initially expected, and market conditions can shift over a multi-year hold in ways a shorter-dated facility never has to contend with. A well-structured land bank facility builds some allowance for that uncertainty into the term and the exit plan from the outset, rather than assuming the most optimistic timeline will hold.
What lenders look at
Because land produces no income, lenders lend conservatively against it: loan-to-value ratios typically run to a more cautious 50–65%, reflecting both the lack of servicing capacity from the asset itself and the greater uncertainty around land value relative to an improved, income-producing property. The land's zoning status, any development application in progress, and the credibility of the future use case all factor into how the lender views the asset's trajectory.
Serviceability is assessed against the borrower's income or business cash flow rather than the land, since land banking is by definition a non-income-producing holding period, and lenders want confidence the borrower can carry the facility's costs for the full term without relying on the land itself. The exit is considered carefully given the extended term: a planned sale once rezoning completes, a construction facility once the site is ready to build, or a straightforward disposal once market conditions improve.
Because this is a specialised, longer-dated and income-light lending category, the panel is weighted toward private lenders and specialist funds who understand land holding risk specifically, though banks remain part of the broader lender panel Solara works with and can be considered where a borrower's broader financial position and relationship support it. Documentation is generally full-doc or alt-doc, and credit history is assessed with reasonable flexibility — minor, explained defaults will not typically exclude an otherwise well-positioned borrower, though this is a more conservative-tolerance product than the shorter-dated facilities in the category, reflecting the multi-year commitment involved.
Typical terms
|
|
| Size |
$500,000 to $50m+, subject to lender assessment |
| LVR |
Typically up to 50–65% |
| Term |
Twelve to thirty-six months |
| Speed |
Indicative approval in 14–42 business days from a complete application |
| Security |
First mortgage over the land |
| Pricing |
Priced on risk and security; indicative range on enquiry |
Structures we see most
Rezoning hold. Funds a site through a rezoning process, with the loan term matched to the expected planning timeline and the exit tied to either a sale post-rezoning or a construction facility once development rights are secured.
DA-stage land loan. Holds a site through the development application process, where a more advanced approvals position generally supports a stronger loan-to-value ratio than raw, unzoned land.
Englobo land acquisition. Funds the acquisition of large, undeveloped parcels ahead of subdivision, typically the longest-dated and most conservatively geared structure in this category given the extended planning and infrastructure timeline involved.
Strategic holding facility. Used by land bankers taking a longer-term market view rather than pursuing an active development or rezoning process, with the loan simply carrying the holding costs until the borrower chooses to act.
Land-to-construction bridge. Structured with an eye to transitioning into a construction facility once the site is development-ready, with the land loan's lender and terms often set up in anticipation of that next stage.
Joint venture land holding. Where a site is held through a joint venture between a developer and a capital partner, the land loan is structured against the joint venture entity, with each party's contribution and priority clearly documented alongside the mortgage itself.
Costs and how we're paid
Pricing on land bank loans reflects the absence of income from the asset, the loan-to-value ratio and the length of the holding period, and is quoted on enquiry once a lender has reviewed the file — no flat rate applies across the product. Facilities may carry an establishment fee and ongoing line fees reflecting the extended term; all costs are set out in the loan offer before a borrower commits.
Solara is remunerated by the lender, the borrower, or both, depending on structure, which may include a commission from the lender and/or a broker fee agreed with the borrower. Any commission or fee is disclosed in writing before an application proceeds.
Because interest is typically accruing without an offsetting income stream, many land bank facilities are structured with capitalised interest, meaning the true cost of the facility is only fully apparent once the loan is repaid or refinanced. Borrowers should factor the compounding effect of a multi-year, capitalised facility into their overall project feasibility from the outset, rather than treating the headline rate in isolation.
Process and timing
- Initial scoping call — typically same day. We confirm the land, its zoning and approvals status, the intended holding period and the borrower's servicing capacity.
- Document collection — typically 3–7 business days. Title and zoning information, any development application material, and financials appropriate to the doc level.
- Lender matching and submission — typically 3–5 business days. We place the file with the private lenders and specialist funds whose appetite matches the land type and timeframe.
- Approval and offer — typically 7–21 business days.
- Documentation and settlement — typically 5–10 business days once terms are accepted and the mortgage is registered.
Frequently asked
What is a land bank loan?
It is a loan that funds the holding of undeveloped or approvals-stage land, generally secured by a first mortgage, structured around an extended holding period and serviced from the borrower's other income rather than the land itself.
Why is the loan-to-value ratio lower for land than for developed property?
Because land produces no income and its value can be less certain than an improved, income-producing asset, lenders lend more conservatively against it, typically to around 50–65% rather than the higher ratios available on developed commercial or residential property.
How is a land bank loan serviced if the land earns no income?
Through the borrower's broader business or investment income, rather than the land itself, which is why lenders assess the borrower's overall financial position and servicing capacity closely rather than relying on the asset to carry the loan.
Can I get a land bank loan while a development application is in progress?
Yes — this is one of the more common uses of the product, and a site with an active or advanced DA generally supports stronger terms than raw, unzoned land given the clearer path to future value.
How long can a land bank loan run for?
Typically twelve to thirty-six months, matched to the expected timeline for rezoning, approvals, or the borrower's intended holding period before sale or development.
What happens at the end of the loan term if approvals are delayed?
Borrowers should engage with their lender well ahead of maturity to discuss an extension or refinance, since planning and approvals timelines can move slower than initially expected; building some buffer into the original term is common practice.
Is a land bank loan the same as construction finance?
No. A land bank loan holds a site before it is ready to build on; construction finance funds the build itself once approvals and a build contract are in place. Many developers move from one to the other as a project progresses.
Can banks fund land bank loans?
Banks remain part of the broader lender panel and can be considered, particularly where a borrower's overall relationship and financial position support it, though the specialised, income-light nature of land holding means private lenders and specialist funds are typically the more active part of the panel for this product.
Related products
Construction finance — the natural next step once a land-banked site is development-ready and a build contract is in place.
Mezzanine & preferred equity — worth considering directly where a land holding or development project needs additional capital beyond what senior land or construction debt alone will fund.
Rural & agribusiness loans — the closer match where the land in question is a farming or agricultural property rather than a future development site.