And Oakville land loan is typically a mortgage on residential or commercial property where there is no building currently in place. The land can be in a bare land state or have some amount of development or infrastructure installation completed. In most cases, the more developed the property is, the higher the market value associated with it and the higher the amount of land financing that can be secured against it.
The general rule for Oakville land financing for bare land is for both institutional and private mortgage lenders is that a mortgage cannot exceed 50% of the property value. Institutional lenders will be more focused on the cash flow available to service the debt while private lenders will hang their lending decision more on the exit strategy to repay the loan at the end of the lending term which tends to me one or two years in length.
Property that is on the verge of development or sitting against an area to be developed is going to attract more lender interest that a piece of bare lend real estate sitting in the middle of nowhere with nothing going on around it.
As the property starts to be developed, the loan to value ratio can increase from 50% to as high as 70% in some cases. And as more development is completed, the property will likely increase in value, creating the ability to lend even more funds.
Land financing tends to be the first step of a construction project whereby the land for the development be acquired through the use of property mortgage funding. Once the land is secured, any equity that remains in the property or is created through land development activities, can be used to help secure a construction mortgage against the property.
In cases such as this, the exit strategy for the land mortgage provider is either the sale of the property at the completion of construction or the pay out of the land loan via a long term take out mortgage. In either case, these exit options create more opportunities to not only secure a land loan prior to construction, but at better rates and leverage ratios as well.
If you require an Oakville land loan or mortgage, I suggest that you give me a call so I can quickly assess your requirements and provide relevant land financing options for your immediate consideration.