Existing Loan,anyone Help Me?

Q: I recently tried to refinance an existing loan and was rejected by two financial institutions (Homepath & CBA). Problem was that I want to put up vacant residential land as security against a 50,000 dollar loan - used to reduce the variable portion of my existing loan. Apparently they require some form of building on the land before they can take it as security?? what's up with that.. Does anyone know why this is so? My next stop is NAB..can anyone recommend an institution that takes vacant land as security?

A: The two main points are 1. the LVR (loan/valuation ratio) that most of the financial institutions use is lower for vacant land than it is for residential housing. The bank asks "if the borrower defaults, can I get the money back?". It's a lot harder to sell vacant land than residential property, especially in more remote areas. Typical maximum LVRs are 80% for residential, 50% for vacant residential

land, 30% for rural/farms. 2. banks may require "mortage insurance" for residential property LVRs>90%. The mortgage insurer pays the bank (not you) if you default. This risk passes to the mortgage insurer. This is why the banks love to lend on residential property - the bank structures the transaction so they rarely lose money. You really need to talk to a finance professional about these commercial requirements. Often they can "bend the rules" if they know the borrower has a steady income. Try talking to the bank manager (not a loans officer) or look up "finance brokers" in the yellow pages. http://www.commercialpropertysearch.com.au/loan.asp provides loans on vacant land.