Land bank finance helps developers and investors purchase land while waiting for development approval, funding, or property sale.
What is Land Bank Finance?
Land bank finance is short-term funding (typically 6-24 months) to purchase land before long-term development finance or construction funding is in place.
Common Uses:
- Buy land before DA (Development Approval)
- Secure site while arranging construction loan
- Purchase before selling existing property
- Land assembly (buying multiple parcels)
How Land Bank Finance Works
Typical Scenario:
Your Situation:
- Found perfect development site: $1.5M
- Need DA before bank will lend
- DA process: 6-12 months
- Don't have $1.5M cash
Land Bank Solution:
- Land bank loan: $1.5M for 12 months
- Buy land immediately
- Lodge DA application
- Once DA approved, refinance to development loan
- Or sell land at profit
Land Bank Finance Rates
Interest Rates:
- Bank land bank: Rare (most won't do it)
- Private land bank: 9-15% p.a.
- Higher risk land bank: 12-18% p.a.
Fees:
- Establishment: 1-3%
- Valuation: $1,000-$3,000
- Legal: $2,000-$5,000
Example Cost: $1M land bank for 12 months @ 12% p.a.:
- Interest: $120,000
- Establishment (2%): $20,000
- Other: $5,000
- Total: $145,000
Worth it if:
- Land will increase in value with DA
- Secures key site
- Enables larger development profit
Requirements
✅ Land purchase contract ✅ Development plan/feasibility ✅ Exit strategy (DA timeline, presales, etc.) ✅ 30-40% equity contribution ✅ Developer experience (helpful)
LVR: Typically 60-70% of land value
Exit Strategies
1. Refinance to Development Loan
- DA approved
- Switch to construction finance
- Develop the site
2. Sell Land
- DA adds value
- Sell to another developer
- Profit from land value uplift
3. Sell Existing Property
- Your property sells
- Pay out land bank loan
- Fund development from equity
4. Find Development Partner
- Partner contributes equity
- Pay out land bank loan
- Joint venture development
Ready to secure development land? Connect with land bank lenders.