House Lot Financing
“House Lot Financing Is Driven By
Market Location”
If you’re looking for house lot financing for a lot that you’re wanting to acquire or for a lot you already own, the location of the lot is going to be very important with both institutional and private mortgage lenders.
In a very active market area, its not that difficult to get financing for vacant lot of 50% loan to value from a bank or institutional lender, provided that the real estate is in a major market with regular sales occurring for similar lots.
As you move away from major centers, banks and institutional lenders will be less interested in the deal in general, even at higher rates and lower loan to value ratios.
Private lenders will also finance house lots, provided that they know the local market and are again comfortable that there is a good resale market present for the specific type of lot you’re trying to finance.
If there isn’t a strong resale market in place for house lots in your area, then the next important element that needs to be present is a well defined plan for either future repayment of the loan at the end of the term or a plan for future development that will increase the value of the property.
Any lender that is providing house lot financing is going to be in first mortgage position. So if you improve the lot by either adding servicing, landscaping, or building construction, then the value of the underlying security is going to increase, providing a higher loan to value for the first mortgage lender and increasing the potential market interest in the property as a developed or semi developed lot.
Another option would be to have a recourse agreement for a mortgage lender whereby a third party agrees to purchase the property from you at a set price and pay the proceeds directly to the lender in the event of mortgage payment default. This can provide the additional security the lender may need to finance the house lot in the event that the market is not viewed to be strong enough otherwise to support a mortgage financing decision.
If you require house lot financing, please give me a call and I’ll quickly go over your requirements and provide house lot financing options that meet your needs.
Ontario Construction LoansLand Loan
“A Land Loan Is Typically The First Step Of A Development Project”
A Land Loan tends to be one of the first types of building construction loans that can be required for a development or construction project.
This can be a bare land loan or land loans for semi developed properties that perhaps already have services and road access in place. If these services still need to be put in place, a separate site development loan may also need to be acquired for the project
Because the loan is real estate based and will be secured by a land mortgage, there are more likely to be options available for financing.
Like most anything else associated with land, the key to securing land financing is all about location.
A property that is located within a developed or semi developed area is going to be more appealing to a mortgage lender than one in the middle of nowhere with nothing going on around it.
There can be quite a range in terms of what amount of financing you can get on any given property, but in most cases, the lender’s interest will fall between 40% and 60% of the fair market value.
One of the potential benefits of trying to acquire a land loan is that your may have a full complement of mortgage lending choices right from bank and institutional lenders to private mortgage lenders.
Banks are going to be more focused on the cash flow generated by the applicant and their credit standing while private lenders are going to focus more on the fair value of the property and how difficult it may be to market in the event of a loan default.
Even if you can qualify for a bank land loan, you may still opt for a private mortgage as the requirements for financing and the length of time required to complete the application process can be substantially less than through a conventional lender. This can be a big issue when you’ve got an accepted offer to purchase, subject to financing and time is running out on the financing condition.
Higher loan to values are potentially possible, provide the property is pretty much at the construction stage or is in a highly active construction area.
In order to best determine what land loan options are available to you for any given piece of property, I recommend that you work with an experienced mortgage broker who has access to both private and bank land financing sources as well as a track record of successful placement.
Click Here To Speak With Construction Mortgage Broker Joe Walsh
Milton Land Loan
“We Provide Milton Land Loan Financing On Developed And Bare Land Properties”
Milton land loan financing can be arranged for most types of real estate properties where there is no permanent structures erected. The only real difference between a land loan and a commercial property mortgage per say is that a commercial mortgage has buildings attached to the land. And while there is a broader spectrum of commercial mortgage providers, the number of lenders and lending programs for just land financing is much smaller. This is largely due to the fact that bare land or partially developed land may have a very slow resale market, especially in less developed areas. As a result, mortgage lenders, on average, are less interested in land loans.
The good news is that there are both bank and private mortgage options for bare land loans and developed land loans.
The keys to qualifying for this type of financing is going to be a clean environmental assessment, a recently completed appraisal by an accredited appraiser in most cases, and the ability to service the debt and retire the loan in the future.
With respect to environmental issues, there still can be land loan financing options, but they are going to come from private lenders only and the rates and fees related to these type of land mortgages will likely be considerably higher than properties with a clean environmental report.
For bare land loans, 50% loan to value is very common among land lenders. If the property in question is immediately adjacent to a development or is in the process of being developed, the loan to value could increase to as high as 75%.
Banks and institutional lenders will be more focused on the credit profile and personal net worth of the borrower and/or business, while private mortgage lenders will be more focused on the exit strategy to repay the Milton land loan as private lenders mostly provide one year interest terms only.
In many cases, private lenders are utilized to either get a deal closed and then provide time for a lower cost land financing option to be arranged via a longer term bank mortgage or a take out mortgage after the development and construction are completed.
If you need a Milton land loan for bare land or semi developed property, I recommend that you give me a call so I can quickly assess your situation and provide land loan financing options for your immediate consideration.
Click Here To Speak With Construction Mortgage Broker Joe Walsh
Ontario Construction LoansRichmond Hill Land Financing
“Richmond Hill Land Financing For Semi Developed and Bare Land Properties”
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.
Click Here To Speak With Construction Mortgage Broker Joe Walsh
Ontario Construction LoansAurora Land Loan
“We Provide Aurora Land Loans and Land Mortgage Financing Facilities”
An Aurora land loan or bare land mortgage can be acquired through our network of institutional lenders and private lenders.
With bare land, the keys to the available financing amount that you can expect to secure include location, current use, expected future use, zoning, and so on. The more removed a piece of property is from future development in terms of time and location, the less loan to value. For instance, a bare piece of property in the middle of no where will likely not provide a mortgage amount greater than 50% of the property value. This relates to a likely slow resell time period in the event of default and foreclosure. Properties that are in a more active market area and/or will soon be developed to increase value will provide a higher lending value as a percentage of market value to the lender’s view that resale will be faster if required, and overall risk of loss will be lower.
For bank or institutional lenders to consider providing an aurora land loan, you will also be able to show a strong ability to debt service from existing cash flow. The cash flow available to the borrower can come from an unrelated source.
Private lenders are going to be less concerned on the historical proof of cash flow for debt service, although debt servicing is likely going to be required on a monthly basis.
The majority of Aurora bare land loans or land mortgages are provide by private lenders that have a good working knowledge of the local market and can take a hands on approach to loan and security assessment. Private lenders do have a higher cost of funds, but they tend to be interest only monthly payments with terms of one year in most cases. Private lenders can be excellent sources of short term financing, especially when you’re in a hurry and need to get something in place in a relatively short period of time.
Bank or institutional land loans will take longer to arrange so if you believe you can meet their requirements and want to take advantage of a lower cost of funds, then make sure you allow yourself plenty of time to go through the application and approval process.
If you require an Aurora land loan at this time, please give me a call so I can quickly assess your situation and provide relevant options for your immediate consideration.
Click Here To Speak With Construction Mortgage Broker Joe Walsh
Ontario Construction Loans
