Many people normally ask, how they can get a construction loan in case you own land. However, there are various ways and methods which financial institutions use to finance your project. It’s good to obtain your project loan from a well recognized financial institution. Some loan lenders mostly require the loan borrower to meet a down payment of at least 20% of the required loan amount. However, for someone owning the land, that is, where the project will be laid, has the advantage of using it as equity for securing the project loan.
To obtain the loan you need to do the following.
On approving your building plans, it’s good to select well-experienced constructor with a good reputation in home constructions. Hence you need to collect all your employment and financial data and documents which prove you are the legal landowner where the project is being done. Then prepare your personal financial statement. This can be done by assembling your last three financial years. And lastly, have your property appraised by a great financial professional.
2. The Land
Before meeting with your loan financier, ensure the land is eligible to secure the loan. Meaning there shouldn’t be a problem like liens in effect. Therefore, it’s good to visit your townland registry offices for clarity on title deeds. In case of any issues have your lawyer guidance to help in sorting everything for you. In case you bought the land for the last 12 months, then project financier may use the paid amount in calculating the down payments instead of the appraisal value. Therefore, get informed about your lender terms.
3. Construction Loans
After completing all the preparations, then reach out to your lender. Mostly the best lenders are real estate organizations. Hence, meet with the banker and begin your application process. The lender will be evaluating you as a borrower as well as your choice contractor to ensure he/she has met all the qualifications. However, the lender may either approve or ask you to make another order. When the project loan is approved, the lender advances the funds to the constructor. The financier keeps on visiting the project to inspect the progress.
For you to get the loan, you have to present various useful documents to the financier. The documents include:
- A copy of the building contract signed by both the contractor and you.
- The building plan as well as working drawings.
- The site plan showing all the legal description as well as the property dimension.
- A financial appraisal showing the building final value after constructing.
- The land title deed.
- A good resume confirming your great knowledge concerning the building activity.
- In case of any sub-contracts, their copies have to be submitted to the lender.
However, when the project has been completed and all the inspections carried out, it’s advisable for the building owner to change the project loan to a long-term loan. This gives you a humble time to meet the costs incurred. The lender may sometimes provide a long-term loan for your project. Alternatively, some people shop for a permanent financing solution via a loan broker after completion