A Guelph land loan can be for bare land, partially developed, or fully developed property. For many construction projects, the land loan is the first type of financing required to acquire the location where construction will take place. The actual construction or building loan in many cases is a second mortgage charge against the property, directly behind the land loan.
When bare land is already owned, a land loan can be required to further develop the property to a state where building construction can take place or to a condition where the property is more marketable for resale.
While land financing is typically for a use of funds related to the property itself, it can also be for a totally unrelated application as well. Because real estate financing is the most stable form of secured financing for most lenders, a Guelph land loan or land mortgage can be used to access the equity in a property for a wide variety of bridge financing applications.
When the use of funds is not related to the property itself, the source of financing is likely going to come from a private lending source. A private lender is going to be more focused on the market value of the property, its resale ability, and the projected exit strategy that the borrower has for repaying the loan at the end of the land mortgage term which typically will be for one year for a private mortgage.
A bare land loan will typically be issued for 50% of the fair market value of the property. If the land is immediately adjacent to an active development or there are imminent plans in place for the development of the property itself, the amount of financing can be higher as the likelihood of increased market value and/or increased market demand reduce the risk of loss to the lender.
If the application of funds from a land loan directly increases the value of the underlying property, then the amount of funding available from lending sources may vary well increase to reflect the market increase from the work being proposed.
If you require a Guelph land loan, I suggest that you give me a call so I can quickly review your requirements and provide you with land financing options that will meet your needs.