How does land affect the cost of property?
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A property’s cost may be affected by the size, shape and location of the land it sits on. Having property with a lot of land doesn’t immediately equal having high property value though. There are several factors that come into play when assessing the land-to-asset ratio. But the most important is location.
If you have two properties, both with the same land-to-asset ratio, but property A is located 15km from the CBD and property B is located 30km from CBD, then property A is probably worth more. Why? Location. Typically, there is a higher demand for properties closer to CBDs.
And where there is little supply and high demand, the land’s value per square metre usually rises further.
Why your property location matters
When people are looking for a place to live, typically they want a location that comes with several nearby amenities. So, property A from the example above is closer to the CBD and its amenities, which makes it possibly a more attractive location compared to property B.
While property on land that makes living ‘easy’ is more sought after, keep in mind that proximity to good amenities can also have a downside. There are things to consider like outside noise: if you find a property 50 metres away from a busy train line, for instance, you may find it is cheaper than a home that is 150 metres away. Why? Even though there is often a demand to be close to a train station, the noise factor might drive more people to not want the property.
Another thing to consider is the environmental conditions of the land. A property near bushland that is at higher risk of being caught in a bushfire is less valuable than those without. If the area of the property is prone to heavy corrosion, flooding and sinkholes then there will be less buyers interested. It also means your home insurance may be more expensive.
So while a property might have a beautiful and modern house, a location with potential problems may negatively impact its selling price. Of course this may be good for the buyer but bad for the seller.
What affects your land’s value
There are many factors that come to calculating the value of land. One way to look at it is the land-to-asset ratio, which is the percentage of the overall property value made up of the land component. For example, if the property costs $1 million, and the value of the land is $500,000 then the land-to-asset ratio is 50%.
Other important factors for assessing a property include:
- Suburb’s track record - Places with high crime rates are typically cheaper, but it also means that the property is less likely to increase in value over time.
- School zones - School catchment areas can influence property prices, especially near top schools. Parents want to live near good schools to give their children a chance at a high quality education.
- Access to public transport - How easy (or uneasy) access to buses, trams and train stations may drive up the price of the land due to its high demand for workers, families and students.
- Size and facilities - The bigger the home or land space the higher the price. Homes with more rooms, garages, pools, and backyards tend to be factored into the property’s value. Depending on the location the more of these facilities there are (and their size) the more value it will add to the property.
- Potential for renovations - Properties with enough land space to expand and renovate are typically more sought after, increasing demand and raising prices.
- Energy efficiency - Due to the ongoing climate crises, conscious buyers may seek property that has utilities like solar panels, energy-efficient light bulbs or appliances. Also, who wouldn’t want cheaper utility bills?
If you are looking to buy a new property, check out Mozo’s home loan comparison page to find the best way to finance your future home.
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5.99
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no
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- $150,000
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- Variable
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6.34
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$0.00
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yes - free
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no
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- Fixed
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5.99
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5.90
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p.a.
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$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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5.90
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$0
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$0.00
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$0.00
- Extra repayments
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yes - free
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yes - free
- Offset account
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no
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
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no
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5.99
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$2,995
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5.99
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6.34
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$250
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$300.00
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yes - free
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yes - free
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yes
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Express Home Loan
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6.01
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6.14
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$3,001
Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
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6.01
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6.14
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$134
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$10.00 monthly
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$350.00
- Extra repayments
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yes - free
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yes - free
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yes
- Maximum loan to value ratio
- 90.00%
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- $5,000
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- $3,000,000
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Neat Home Loan
- Owner Occupier
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- Interest rate
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6.09
%
p.a.
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6.11
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p.a.
- Initial monthly repayment
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$3,027
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- Interest rate
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6.09
%
p.a.
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- Comparison rate
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6.11
%
p.a.
- Upfront fees
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$250
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$0.00
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$300.00
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yes - free
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yes - free
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no
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- $80,000
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- $5,000,000
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Special Real Deal Home Loan
- Owner Occupier
- Principal & Interest
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6.09
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Variable
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6.13
%
p.a.
- Initial monthly repayment
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$3,027
Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.
- Interest rate
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6.09
%
p.a.
Variable
- Comparison rate
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6.13
%
p.a.
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$595
- Ongoing fees
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$0.00
- Discharge fee
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$250.00
- Extra repayments
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yes - free
- Redraw facility
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yes - fees apply
- Offset account
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no
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- -
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special offers
- $2,000 online cashback when for refinance or purchase loans of $250,00 -$499,999.99, $3,000 for loan amounts of >$500,000.
Read our Mozo Review to learn more about this Newcastle Permanent Special Real Deal Home Loan
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Basic Home Loan
- Owner Occupier
- LVR<60%
- Principal & Interest
- Interest rate
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6.14
%
p.a.
Variable
- Comparison rate
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6.16
%
p.a.
- Initial monthly repayment
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$3,043
Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
- Interest rate
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6.14
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6.16
%
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$350
- Ongoing fees
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$0.00
- Discharge fee
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$400.00
- Extra repayments
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yes - free
- Redraw facility
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yes - free
- Offset account
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no
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
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Flex Home Loan
- Owner Occupier
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6.14
%
p.a.
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- Comparison rate
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6.38
%
p.a.
- Initial monthly repayment
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$3,043
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
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6.14
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6.38
%
p.a.
- Upfront fees
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$250
- Ongoing fees
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$250.00 yearly
- Discharge fee
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$300.00
- Extra repayments
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yes - free
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yes - free
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yes
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- -
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Offset Home Loan
- Owner Occupier
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- Principal & Interest
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6.14
%
p.a.
Variable
- Comparison rate
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6.39
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p.a.
- Initial monthly repayment
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$3,043
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
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6.14
%
p.a.
Variable
- Comparison rate
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6.39
%
p.a.
- Upfront fees
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$350
- Ongoing fees
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$248.00 yearly
- Discharge fee
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$400.00
- Extra repayments
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yes - free
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yes - free
- Offset account
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yes
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
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Basic Home Loan
- Fixed
- Owner Occupier
- Principal & Interest
- LVR<70%
- Interest rate
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6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.20
%
p.a.
- Initial monthly repayment
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$3,079
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.
- Interest rate
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6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.20
%
p.a.
- Upfront fees
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$350
- Ongoing fees
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$0.00
- Discharge fee
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$400.00
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yes - up to $10,000 p.a.
- Redraw facility
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yes - free
- Offset account
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no
- Maximum loan to value ratio
- 70.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
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Offset Home Loan
- Fixed
- Owner Occupier
- Principal & Interest
- LVR <70%
- Interest rate
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6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.42
%
p.a.
- Initial monthly repayment
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$3,079
- Interest rate
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6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.42
%
p.a.
- Upfront fees
-
$350
- Ongoing fees
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$248.00 yearly
- Discharge fee
-
$400.00
- Extra repayments
-
yes - up to $10,000 p.a.
- Redraw facility
-
yes - free
- Offset account
-
yes
- Maximum loan to value ratio
- 70.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Fixed
- Repayment types
- Principal & Interest
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- Owner Occupier
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Fixed Rate
- Owner Occupier
- Principal & Interest
- <80% LVR
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Initial monthly repayment
-
$3,174
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Upfront fees
-
$160
- Ongoing fees
-
$0.00
- Discharge fee
-
$160.00
- Extra repayments
-
yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
- Redraw facility
-
no
- Offset account
-
Optional - $10 per month - 1 year fixed term only
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $20,000
- Maximum borrowing amount
- -
- Type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special offers
- $3,000 cashback for eligible First Home Buyers, $2,000 cashback when you refinance loans of $250k+, apply from 1 Dec 2022, settle within 180 days.
Read our Mozo Review to learn more about this ANZ Fixed Rate
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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