Step 1. Creditworthiness
A loan for the construction of a house is practically the same as for a flat or a finished house. The purchase of a construction plot is one of the purposes of lending, as is the purchase of a house or flat. – Currently, in fact, most banks accept such a purpose of the loan and impose similar requirements on borrowers as in the case of a standard housing loan. First of all, the bank will not grant a loan if the person applying for it does not have creditworthiness, i.e. high and stable income, which will allow the borrower to regularly pay off monthly installments and at the same time subsistence – explains Mike, chief analyst, Credit House Marcus. Futher reading at thebeagleproject.com
Step 2. Mortgage
Each mortgage is secured on real estate, therefore real estate will also be secured by a loan for the purchase of a construction plot. No problem, if the borrower simultaneously takes a loan to buy a plot of land and build a house, then the bank will secure the newly built property. However, if we buy a plot and it is to be a collateral for the loan, then not all banks will be willing to provide such financing, as some banks do not provide for the possibility of establishing collateral for a loan on an undeveloped plot, so in this case we must present another property as collateral for a loan for purchase plot. Only in this way will we obtain a loan for the purchase of a plot in Pekao SA and BPH.
Step 3. Find a bank that will credit the purchase of the plot
Currently, out of around 25 banks on the market that grant mortgage loans, only 13 are ready to finance the purchase of a construction plot. These are practically the same offers as for the purchase of a finished property or construction loan. The interest rate is determined by the loan amount and the LTV ratio. A loan for the purchase of a plot of land may also be granted for a maximum period not exceeding 35 years.
However, looking for the right offer, we need to properly analyze the banks’ offers, because often there will be significant differences between the loan for the purchase of a plot of land and the purchase of residential real estate. For example, at Rakish bank, the loan for the purchase of a plot of land cannot be higher than 50% of its value, which means that 50% of the company’s own contribution must be paid. In addition, such a loan may not be granted for a period longer than 20 years. In the case of Dunker Bank, the borrower must additionally have a creditworthiness surplus of PLN 150,000 or document ownership of such assets. It is also worth remembering the restrictions on the area of the purchased plot – at mYBank, a construction plot cannot be larger than 1 hectare – says Mikel from the Marcus Credit House.
Increased creditworthiness in recent months.
Step 4. Required documents
With the loan for the purchase of a plot, the bank will require a document confirming the status of the plot, i.e. whether it is really a construction plot. In fact, it is the main document for the bank when crediting the purchase of a construction plot, because as a rule banks will not be willing to credit a standard housing loan for an agricultural or usable plot, which is why it must be confirmed in advance what the purpose of the area is. For this you should provide the bank with a decision on the building and land development conditions, or a certificate of intended use in the current spatial development plan. Based on these documents, it is possible to determine the legal status of the plot, whether it is really a plot on which it will be possible to build a house. In addition, banks also require a valid excerpt and excerpt from the land register and a document confirming that the seller is actually the legal owner of the land.
List of documents necessary to submit the application:
- copy of the land and mortgage register;
- Division decision if the plot will be separated from another;
- excerpt from the land register and a copy of the cadastral map;
- document confirming the zoning of the area for housing (decision on zoning conditions or certificate of zoning in the current spatial development plan);
- preliminary agreement.
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