Owning a construction site is the first step on the way to building your own home. If you want to obtain it, you can apply to the bank for a loan for a construction plot. What will such a liability involve and what conditions must be met by the borrower?
A loan for the purchase of a building plot
Purchase of a building plot can be financed with a loan. A loan for a plot is basically an identical product, like a loan to buy a flat or a finished house. Purchase of a building plot for the majority of banks will be an acceptable loan goal. Borrowers when applying for such an obligation will have to meet similar requirements as in the case of a standard housing loan.
You can immediately take out a loan to buy a plot and build a house, but you must have a sufficiently high creditworthiness and be a reliable borrower for the lending institution. The bank will most probably require establishing some security for the loan repayment, therefore the loan for the plot is usually in the form of a mortgage loan.
Mortgage for the purchase of a plot
The mortgage is a solid security for the repayment of the debt incurred in the bank. It consists in making an entry in the land and mortgage register of a specific real estate mortgage for the benefit of the bank. The loan for the purchase of the building plot will also be secured by the real estate, for example the plot itself, the flat owned by the borrower or the house being built.
Attention! Some banks do not provide for the possibility of establishing a loan security for a plot of land not built on. In this case, the client must present another property as collateral for an effective loan.
Own contribution to a mortgage for the purchase of a plot
In accordance with the current recommendations of the Polish Financial Supervision Authority, clients applying for a mortgage for the purchase of a building plot must contribute at least 20 percent. own contribution. It can be 10 percentage points lower if the remaining 10 percent. property value will be secured in the form of special insurance of the missing own contribution. The higher the client’s own contribution will be, the better the loan conditions will be obtained from the selected bank.
Required documents for the loan application
In order to effectively apply for a loan on a plot with mortgage collateral, the client must submit documents confirming the status of the plot, confirming that we are dealing with a building plot. All you need to do is deliver a copy of the land and mortgage register to the bank, attach a decision on the land development and development conditions, or possibly a certificate of purpose in the current land use plan. The application should also include a division decision if the plot is separated from another, as well as a preliminary purchase agreement and a copy of the record map.