Tip #1: Sort Through The Use and Purpose 

 You need to have a business goal in mind. Land loans are often for buying undeveloped land that can be used later for commercial or residential properties. The uses can also include recreational and farming purposes. 

Undeveloped land usually comes with higher interest rates and down payments. There are several types to look at including raw land loans where there are no improvements or infrastructure. Another division is called an unimproved land loan where there might only be utilities. Finally, an improved land loan is another category which has utilities and roads. 

 Tip#2: Get Ready For The Additional Requirements That Come With Land Loans   

If you’re looking for one of these loans, your business should be ready for some extra requirements. Top of the list is an environmental assessment. That’s a big one that many lenders require if you’re planning to use the land for a commercial purpose.

You’ll also need to have all of the zoning and permits in order and some Financial projections that include cash flow statements at the ready.

A land loan application usually requires a detailed development plan with timelines and construction plans included to get the funding.

OMJ Mortgage Capital Specializes in different types of financing solutions including land loans.  we have access to a variety of different types of lenders and you can leverage our extensive network by getting in touch with us.

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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.

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• The type of property you want to purchase will affect the kind of commercial loan you get. Most lenders classify these properties into several categories based on occupancy rates, income potential, risk levels, and maintenance costs. Here’s an example. A multi-family property with long-term tenants and a good cash flow is less risky than a hotel. Those depend on seasonal demands.
• Understanding how the price was established is also helpful when you’re looking at securing commercial mortgages for land loans. It’s a good idea to compare similar properties in the general location. An appraisal is essential. One that’s gone through the Accredited Appraiser Canadian Institute is credible.

Remember, there are several reasons why lending institutions don’t usually offer similar mortgages to commercial and residential properties.

Commercial properties are often used for business purposes and are valued differently. That means a commercial building’s physical structure is taken into account. However, the structure’s potential income is another factor that goes into a commercial mortgage.

Condition of the Building

We also suggest that applicants take a good look at the condition of the building. For example, if extensive renovations are needed, getting a contractor to provide a detailed quote that can be factored into your purchase price is essential.

OMJ Mortgage Capital Is happy to help you look after your commercial mortgages for land loan needs. We are glad to arrange your mortgage through various financial institutions and alternative lenders for commercial and other property types. Contact us today so we can explore the different ways to help you achieve your business goals. We are always happy to help you achieve your business and residential requirements.

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