Land Mortgage Lenders: Real Estate In The Medium Term

Land mortgage lenders often offer medium term loans to those who wish to borrow land that is undeveloped or semi-developed. Here are some facts about medium term land loans.

  • Medium term land loans typically have an amortization of 15 years.
  • Land mortgage lenders tend to have stricter standards for approval for land loans than for regular mortgages.
  • Significant down payments are often required for land mortgages.
  • In general, land mortgages have a greater loan to value ratio, meaning the loan will cover less of the appraised value of the land. This ratio could be as low as 50% on undeveloped land.
  • Land mortgage lenders may consider medium term mortgages because this reduces the risk of loan defult. This is because the loan will be in repayment for nearly half of the time that a typical 30 year mortgage will be in repayment.
  • A land mortgage, even a medium term loan, may be difficult to obtain if the land has not been inspected and is properly zoned for approriate plumbing.
  • Depending on the lender, a medium term land loan may be difficult to obtain due to the fact lenders generally assume that vacant land is difficult to resell. The collateral of vacant land is considered to be much less in value than developed land.

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