Richmond Hill land financing for residential, commercial, or industrial real estate lots, can be arranged through both bank and private lending sources.
To get a bank loan for bare land or semi developed land financing, the loan to value to going to be around 50% and the cheaper bank rates are going to require the applicant to have good credit and a documented form or forms of cash flow to service the debt. In cases of land that is going to be developed right away, a bank will arrange to have a larger percentage of potential lot sales be put towards the outstanding principal on the loan in order to pay it down without reducing the loan to value securing the remainder of the loan. This proceed amount on sale can be anywhere from 75% to 100% of the proceeds.
With bare land that is not net being developed, a bank or institutional lender will likely lend in the area of 40% to 60% loan to value, depending on the specific property and where its located. The key to getting bank financing is going to be linked to the cash flow and personal guarantee the borrower can provide as without both of these elements, its unlikely that an institutional land loan will be secured.
Private mortgage lending is also an alternative for Richmond Hill Land financing requirements. The basic differences between a private lender and a bank is that the private lending source is going to be more focused on the market value of the property and the equity it contains as well as the exit strategy with less focus on credit profile or ongoing cash flow to service debt.
Most private lenders that provide land loans are located in the same market area and have a strong sense of what the market value and resale ability of the property is, allowing them to make a decision much faster than an institutional or bank lender. If the loan goes into default for a private lender, they may be prepared to purchase or acquire the land themselves in order to settle the outstanding principal balance owing.
If you need a Richmond Hill land loan, I suggest that you give me a call so I can quickly assess your situation and provide land financing options for your immediate consideration.