“Let Us Quickly Provide You With Newmarket Land Development Loan Options”

Newmarket land development loans can be acquired for a wide range of land development projects, or phases within a larger construction project.

Typically, the property being developed is offered as security to the lender, either in a first or second mortgage position, and because the funds being acquired are for the express purpose of improving the value of the real estate property in question, the proposed work is usually taken into account when determining the both the fair value of the property and the loan size.

For example, a piece of bare land may be worth $50,000 in its current form, but after $100,000 is invested in land development activities, the property may be worth $150,000 or even more. And as long as each draw request comes at a stage where the work done to date has incrementally increased the value of the property, more funds can be advanced against this increased value.

That being said, land development loans can also be secured against other, unrelated pieces of real estate in order to provide enough equity for the mortgage lender.

For the most part, a Newmarket land development loan is a form of construction financing even though there may not be an building construction being done with the funds. Because the activity is related to building construction, land development loans are most commonly provided by construction mortgage lenders which can be bank or private lending sources.

In order to get higher loan to value ratios for land development loans, the property has to be in an active resale market for the intended use it has been developed for. When the end product is actually presold, the lending ratios can be as high as 80% of the post development value, depending on the property and the lender.

Most Newmarket land development loans are provided via private mortgage lenders due to the greater focus on pure equity lending and the less administrative requirements with respect to getting a loan approved in the first place and then the draw management that comes afterwords. Private mortgage lenders in turn tend to work with mortgage brokers that also have some type of specialty with construction financing.

If you require a Newmarket land development loan, please give me a call so I can quickly assess your situation and provide relevant land development financing options for your consideration.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Newmarket Land Development Loan first appeared on Ontario Construction Loans And Mortgage Financing.

“Newmarket Land Loan Financing Options Are Available for Developed And Bare Land Properties”

Newmarket land loans can be acquired for properties ranging from totally bare land that has never been developed to properties that require further development prior to building construction.

Because real estate financing is preferred over all other types of debt financing, both banks and private mortgage lenders are interested in providing land loans in Newmarket and the surrounding area.

The basis for a land loan starts with the property location, present use, and current market value. At the low end of the spectrum, bare land in a fairly remote location is going to provide a loan or mortgage no greater than 50% of the current fair market value of the property. A bare land loan can be used to develop the property or for a completely unrelated use. If the acquired funds are invested in further development of the property, any gain in fair market value from the planned work can result in a higher initial land mortgage being granted to the borrower.

For semi developed properties or developed real estate, the loan to property value that can be extended by a lender can reach as high as 85%. Higher lending ratios are going to require 1) a strong and active resale market; 2) proof of historical cash flow for debt service, and 3) a solid exit strategy for repayment of the loan principal over time.

Bank or institutional land financing programs are going to be very focused on all three of these components while private mortgage lenders will be most concerned with the current fair value of the property and the exit strategy for repayment.

Newmarket land financing will be easier to acquire and at lower rates if the real estate is located adjacent to an ongoing area of development. This will increase the likelihood that the property will not only appreciate in value over time, but will be able to be sold in a fairly predictable time frame for a fairly predictable price. When funds are required in a hurry, a private mortgage option is likely going to be preferred over a conventional mortgage program.

if you need Newmarket land financing for land acquisition or property development, I suggest that you give me a call so I can quickly assess your requirements and provide land loan and land mortgage financing options for your immediate consideration.

Click Here To Speak With Mortgage Broker Joe Walsh

The post Newmarket Land Financing first appeared on Ontario Construction Loans And Mortgage Financing.