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.