Land financing and financing construction on your land

 

Land financing and financing construction on your land

 

What is land?

Above is what we addressed as land… haha..


But can purchase of land be financed by bank? Or could bank finance construction of house on your piece of land?


There isn’t much information shared out there compare to housing loan.

Facts about land financing


1. If you own a land, you can refinance the land to cash out appreciated amount out. But the margin of finance ranged greatly from bank to bank, certain bank would only offer 50%, some bank offer to max 70% margin of finance. Hence, it’s very dependable from which bank you apply for the financing.

2. Max loan tenure for land financing also range differently from bank to bank, some offering max 20 years loan tenure, some offering max 35 years loan tenure max 70 years old, like housing loan guideline.

3. The interest rate for land financing are usually much more higher, ranging from 5-6%.

4. Can Malay reserved land status be financed?

Yes, from certain bank only. Because with this status, the land tends to hold less value, because it could only resell back to malay muslim only, which impact the value of the resell value.

5. What documents do I need to provide to banks in order to apply for land financing?

– Standard income documentation

Extra docs would be

– Several pictures of the land, from different angle
– Land title (So that bank can check whether it’s freehold, leasehold, status of the land, who is the ownership, who is the charger etc)

6. What if I don’t have title for the land? Can I get financing?

Nope.

7. Do be aware of different type of land (agriculture, residential, commercial land) bank have different package (margin of financing, interest rate, loan tenure) for it. So, if you wish to apply for land financing, do state clearly what type of land it is to the banker.

Facts about construction + land financing

1. You can finance construction of your building to your own land, while collateralize your own land.

2. Margin of finance will range from 50%-90% max

3. Interest rate will be much lower compare to land financing only. 4-5%

4. Max loan tenure for land financing also range differently from bank to bank, some offering max 20 years loan tenure, some offering max 35 years loan tenure max 70 years old, like housing loan guideline.

5. What documents do I need to provide to banks in order to apply for land financing?

– Standard income documentation

Extra docs would be

– Several pictures of the land, from different angle

– Land title (So that bank can check whether it’s freehold, leasehold, status of the land, who is the ownership, who is the charger etc)

– Consent doc from the land office (depends on which bank)

– Blue print of the property construction certified by the architect

– The total costs summary billed for this construction

– Architect firm profile financial statement book

– Certificate of completion and compliance from the land office

6. The disbursement of cash from bank to the architect firm will be accordance to standard progressive billing table. Hence the disbursement from bank will follow the progress of the property construction stages. Architect need to constantly notify the bank on the building stage of property in order for the stages of disbursement to be release.

7. Can Malay reserved land status be financed?

Yes, from certain bank only. Because with this status, the land tends to hold less value, because it could only resell back to malay muslim only, which impact the value of the resell value.

Do drop your inquiries down below comment section. 🙂

Cheers

Leave a Reply

Your email address will not be published. Required fields are marked *