Lenders often look for a high credit score when you’re in the market for land loans. Land doesn’t generate any income before it’s developed, and it doesn’t provide collateral in the same way that more developed parcels will.
Here’s a high-level overview of some of the things you’ll need to know if you’re applying for land loans.
- The lenders take into account that developing a piece of land takes longer than buying a building that’s already ready to go. Many lenders face the uncertainty that there’s no definite timeline for developing the land. That means their financial risk is higher, and the corresponding interest rates will be the same.
- The type of land makes a difference. Undeveloped raw land is seen as a bigger risk. A parcel that’s already been partially improved with road access and utilities is better. If you’re a developer looking to buy a parcel of undeveloped land, you must ensure your credit score is excellent.
- Lenders can also consider other factors, including whether the proper permits have been secured. You’ll likely also need to have put together a solid development plan.
- Improving a credit score before applying for a land loan is always a good idea. One of the first steps is to check your credit report with Equifax or TransUnion to see if there are any errors.
OMJ Mortgage Capital specializes in financing land loans and a variety of other construction, commercial, and residential mortgage products. We work with a number of different clients throughout the GTA and surrounding areas. Why not get in touch with us today and ask about our excellent track record of successfully funding billions of dollars worth of loans? We have experts on staff that are ready to serve you and get the best possible terms.
