If you used to think that only a mortgage on a home or home could be used for credit, you can forget your stereotypes, as the latest and most modern way of lending is to borrow a piece of land. Any landowner can now take out a mortgage, the only thing he will have to do is look for a bank that offers such a program.
These programs are intended indirectly for the development of agriculture. Farmers and landowners can pledge their own land or individual plots of land to the bank at any time. If the farm is officially formalized, then the entrepreneur can get a good discount on the annual percentage or become a member of a regional program and get a better credit.
There is a steady increase in the number of willing mortgage lenders, but banks are not in a hurry to issue money because the liquidity of the plots remains low. If some investors also offer the option of pledging the land and getting the money in the form of credit, then the terms of the land programs are very unfavorable, and most of the bank’s clients most often refuse such offers. As a general rule, banks agree to issue cash against a pledge of land, provided that the area is not less than 6 hundred.
The amount of the loan also depends on this indicator: the larger the plot, the higher the loan amount. It is relatively easy to apply for a mortgage against a mortgage in a bank if the area has begun active building, alongside a road, communications, etc. You will be more fortunate if you pledge a plot of land belonging to a park or conservation area.
But what if there is a house on the ground?
On the one hand, the land costs a lot more with the house, so the collateral is much more attractive to the bank than just a piece of land. On the other hand, it is difficult enough to adequately evaluate the structure and forecast its price for several years to come. There have been cases where land pledged with a house after 5-10 years has lost significantly in price due to simple depreciation.
In such situations, the bank is at high risk of losing its funds if the customer becomes insolvent. In mortgage loans, the risk is greater for the creditor than for the borrower, as usually the bank alone will be the loser. Don’t expect a mortgage loan to allow you to get a huge sum of money, as banks reinsure themselves twice. Even in the worst-case scenario, a loan collateral must be sold within a few days, and not less than the loan amount.
Which banks are eligible for mortgage credit?
Typically, such a mortgage loan can be offered by the largest banks in the country with the highest rating, because in essence, the land is also a real estate object, so if a bank issues a mortgage loan, it automatically issues the mortgage. To avoid losing anything, choose the first 3 lenders based on their country rating and apply for the loan with the one you like best from this list. Not everyone will respond to your request, but they will.
By the way, this procedure is most easily done on the Internet.
- First step: you find out the highest and most influential bank ratings.
- Step Two: Choose the first 30 credit organizations.
- Step Three: Submit your online credit application to all 30 or optional (for those whose credit terms you like best).
- Step Four: After waiting for the decision on your application, weed out – just select the banks whose terms you are most comfortable with. Later, narrow the circle again to 1 or 2 banks.
The only condition a bank can impose on you is that the land should be within city limits or in a perspective location. It is possible that your area will soon be built with new homes, all communications, road junctions, etc. attracted. In short, you have to prove to the lender if your land is very liquid, only then you can count on credit.