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.