In this regard, there are basically three different classifications of bare land property.
There are serviced lots where all the essential services for a property are already on site.
There are the unserviced lots or partially services lots where services are near by and only need to be connected into the property.
And there are the unserviced lots where there are no near by services other than electricity and where property owners may need to have their own well and septic.
The more services that exist on a lot and/or the closer in proximity the property is to services it doesn’t yet possess, the higher the loan to value a lender will provide, and the greater the potential lender interest overall.
In general terms, bare land mortgages can be secured from 40% of the fair market value of the property to up to 75% for a fully services lot in an urban area.
Banks and other institutional lenders will finance bare land, but in most cases they will only do so if you are intending to develop the property further by adding a permanent structure.
If you are holding the land for short term speculation, or cannot meet the debt servicing requirements of a bank or institutional lender, then you can also secure financing from a private mortgage lender who will make a lending decision based more on the value of the property and their knowledge of the market.
The more remote the property and the less services available on or near the site, the less likely financing will be available. And for financing that is available, the rates and fees are likely going to be higher.
If you are trying to secure a bare land loan for a property acquisition or to arrange financing for a piece of bare land that you already own, then I recommend that you give me a call so I can quickly assess your requirements and provide relevant bare land mortgage financing options for your consideration.