What Are Land Mortgage Loans?
So, you’ve decided to take the plunge and buy a piece of prime land with the intention of constructing a new home on it. But having done that, where do you go for advice when it comes to getting a mortgage for your land? The answer, thankfully, is “all the way at your fingertips.” But before we proceed, just in case you’ve already made up your mind to go the mortgage route, let’s look at the options open to you when it comes to buying property with a mortgage.
In the simplest terms, mortgages are loans against property. If you apply for a mortgage and get approved, that approval is for one period of time – say thirty years for standard mortgages. The term of the loan can be extended if required, but only after the initial period has lapsed. In terms of land loans, on the other hand, these are “abbreviated” mortgages and are typically good for about fifteen years. You can extend these mortgages as often as you like, though doing so will entail paying an additional fee.
One of the things you must bear in mind if you’re going to apply for a land mortgage is that you will require planning permission – and you’ll also have to give a detailed explanation of exactly why you want the land. Getting planning permission is not always easy to obtain. If you don’t get it, your application may be turned down, and you’ll have to reapply with another application. If you’ve already got planning permission, that’s great; the rest isn’t too difficult. The problem, however, is that without it, your plot might not be allowed to be built at all.
Agricultural land loans are different to land mortgages in that they generally don’t require planning permission or any kind of special building permit. The buying process involves applying to the county where the property is located, requesting planning permission, then paying a certain amount of stamp duty (a tax). When you pay this stamp duty, you can buy the land you wish to purchase… but it’s important to remember that you will still have to pay the outstanding stamp duty as well as any other taxes (such as road tax) on the purchase price.
Land loans are much less popular than the conventional mortgage, partly because they are so easily accessible. You can apply for a mortgage for land loans in just a few minutes online. The whole process can be completed by mail, so you won’t need to take time away from work. However, there is one key reason why land loans are a poor choice for the majority of people looking to purchase a piece of land: the interest rates will be far higher than you could get with a conventional mortgage.
But land mortgages aren’t all bad, per say. They are very useful in situations where the mortgage is needed immediately, such as if you want to buy your dream home straight away. Also, a land mortgage can save you money on stamp duty and other charges associated with property purchases. The best types of land mortgages are those that offer no early redemption penalties. If a lender does agree to provide an early redemption charge, it must be clearly stated in the contract. You should also be aware that some lenders may impose even higher early redemption fees on properties which have been vacant for a long time, so you should check their terms and conditions before agreeing to the deal.
A land mortgage may be used to finance a range of projects, including agricultural and commercial ventures, housing development, road building and tree-planting. You will pay a fixed amount each month, which is normally determined by the value of your plot. The money you receive from your land mortgage interest rate is interest only, so you will never receive a penny’s worth of capital. However, the repayments can help you to build up some capital, and they can even be used to finance your child’s education. There are many different types of land finance options available, and they are often used to finance the construction of new buildings, schools, communities and the construction of houses for the elderly.
Land mortgage loans are usually taken out on a ‘first in’ basis, which means that you first need to prove your ability to repay the loan. This can affect your credit rating, so you should consider all the options available before agreeing to the deal. The most important thing to do is to carefully compare your options and get several quotes from different lenders. By doing this, you should be able to find the cheapest rates of interest on land mortgages that are suitable for your needs.