Buying land when not farmers

Lolly01

Hi
We are looking to buy some land and I wanted to know what finance options are available when you aren't a farmer.

Our intention would be to build on it in the next 3 to 5 years. The land doesn't have planning permission at present but we should have no hassle getting it as v strong links to the area.

We have 50% of the asking price saved and need the remaining 50 by way of a loan.

Do banks do these types of loans? We would need c75k over 10 years. I know we can't get a mortgage but is there another loan we could get??

Thanks in advance

Metric Tensor

If you need to borrow 75k over 10 years now then it might be pretty much impossible for you to get a mortgage for a house in 3-5 years time.

Can you buy the land subject to planning? Good links to the area does not guarantee planning and you don't want to end up with land that's no use to you for your needs down the road. I've seen exactly this situation happen recently because people bought land without proper professional planning advice - of course you may have already gotten this - apologies if so.

Sorry - am no help on loan advice - which was your question!

Atlantic Dawn

You want to really check in to what future prospects the land will have to build on, it could be on a flood pain, it could be a potential site for a motorway to go through, lots of research needed, you might even be advised to do test digs on the site first to confirm suitability.

Lolly01

We have got professional advice on the planning so that's not the worry- I'm more concerned will the bank fund the loan?

_Brian

Lolly01 wrote: »

We have got professional advice on the planning so that's not the worry- I'm more concerned will the bank fund the loan?

Advice now means nothing for building on 3-5 years time.
Building on rural plots is becoming difficult and there is no sure bet at all.

Lolly01

If we secure the land we will be applying for planning straight away. So that's not the concern. Can anyone advise on the loan element of my post?

Sam Kade

Lolly01 wrote: »

If we secure the land we will be applying for planning straight away. So that's not the concern. Can anyone advise on the loan element of my post?

The only people that can answer that are the bank, have you enquired about the loan?

Lolly01

We have an appointment with them next week. I was just wondering if anyone else had recent experience of this type of situation . As I know you can't get a mortgage for it.

TheShow

It would be viewed as a speculative purchase for which the banks have no credit appetite from a business point of view, as it generates no income.
From a personal loan point of view, I'd say you might get pushed down the mortgage route because of the intention to build a residence on it. I'd imagine the MCD (Mortgage Credit Directive) legislation might possibly come into force here.
Each bank is different though and has different levels of credit appetite from different transactions.

The only way to find out is to talk to the banks i'm afraid.

Trish56

Try the Credit Union. How many acres are you buying?

Lolly01 wrote: »

Hi
We are looking to buy some land and I wanted to know what finance options are available when you aren't a farmer.

Our intention would be to build on it in the next 3 to 5 years. The land doesn't have planning permission at present but we should have no hassle getting it as v strong links to the area.

We have 50% of the asking price saved and need the remaining 50 by way of a loan.

Do banks do these types of loans? We would need c75k over 10 years. I know we can't get a mortgage but is there another loan we could get??

Thanks in advance

Mooooo

Only the bank will answer it really but will more than likely look for the land as security on the loan, if you have the repayment capacity they may will offer you a loan whatever about the interest rate

TheShow

Mooooo wrote: »

Only the bank will answer it really but will more than likely look for the land as security on the loan, if you have the repayment capacity they may will offer you a loan whatever about the interest rate

absolutely they will take the land as security. mortgage might be the cheaper option, but the long lead time to build could be an issue.
credit union might be the answer here indeed.

db

Whatever you do, do not buy the land without planning permission. You can enter a contract to buy the land subject to planning where you put down a deposit and then apply for the planning. If your application fails you are under no obligation to buy the land and can get the deposit back. If the application succeeds you are contracted to buy the site at the agreed price.
You would obviously need to know where the money is coming from before this. If the site is €150K and you need to borrow €75K I'd say you are in trouble. You can't get a mortgage for a site and I can't see any bank giving you a personal loan for that amount. If you have not finished paying back the loan before you apply for the mortgage to build the house it will be very hard to persuade the bank to give you a mortgage. If there was any way you could get the borrowing requirement to €35K and get it paid back over 2 years you would be in a much stronger situation. Could you negotiate the price of the site or find a different site for closer to €100K?
We were in a similar situation to yourself but we needed just €20K to buy the site which we got as a personal loan and paid back in 12 months. When we went to the bank for the mortgage they could see that we had a strong record of making repayments and had no problem giving us a mortgage. This was during the worst of the downturn when banks were very tight with money.

Lolly01

Thanks everyone, I will explore the credit untion option too!

Trish56

If you do get a 7 or 10 year personal loan from Credit Union or Bank this will not hinder you when you go for a mortgage once you have made all your monthly repayments in time.

When applying for a mortgage you can add the o/s balance owed on the site to the mortgage once your loan to value is within the guidelines 90% as a first time buyer or 80% as a second time buyer.

Lolly01

Trish56 wrote: »

If you do get a 7 or 10 year personal loan from Credit Union or Bank this will not hinder you when you go for a mortgage once you have made all your monthly repayments in time.

When applying for a mortgage you can add the o/s balance owed on the site to the mortgage once your loan to value is within the guidelines 90% as a first time buyer or 80% as a second time buyer.

That's super- great to know!!