Land on investment loans

Lenders consider investment land riskier loans than loans because the property is not being used. This makes poor collateral because the owner can more easily walk from the loan and let the lender stuck with the land. This is the reason why interest rates and down payments tend to be higher for land loans investment. The type of loans for investments that are made much depends on the property, which is the buyer's intention toward using that land and how long it will take the buyer to have the work completed any project there.

Raw or unimproved land that is being sold without any improvement plans tend to be the most difficult for which to get investment loans. Lenders tend to view these parcels as speculative investments. Unimproved land does not have any added improvements such as structures, streets, utilities or sewers. An investment loan on raw land will generally have a substantially higher and higher interest rate than a piece of land that has all the above facilities prepayment. Some lenders will require as much as a 50 percent down payment before they will make loans to investments. The smart shopper will shop around until he or she can find a lender who will go down to as low as 20%. This tends to be local lender who knows the area and property, rather than a lender to a different area.

Those seeking loans for investment land with the intention of improving the land must immediately make sure that the services they need are actually available. A staked survey of the property should be made, because access to the property and easements tend to influence the value of the property. Access may actually be on the way to get investment loans completely. Under certain circumstances refinancing your home mortgage and cashing them will buy land in ways more advantageous than investment loans land. Your current property can secure the loan equity, and this creates less risk for the lender. Taking this route often means a lower interest rate.

Land loans generally have maturities of between ten and fifteen, the same as home equity loans. The interest on your home equity loan can result in a tax deduction on your income tax. Interest expense on investment loans may be tax deductible, but only if the land is held as an investment. It is a good idea for anyone considering land loans have a sit down with a tax advisor if he or she is truly interested in taking this kind of deductible interest. A counselor might suggest approaching a credit union on land loans. Interviewing mortgage brokers is another viable option for land loans investment. In certain circumstances, these interviews end up being the best choice over all others.