It is also worth noting the differences that will nevertheless appear between the loan for the purchase of a plot of land and the purchase of a residential property. For example, in Credit Agricole, the purchase of a plot of land can be financed with a loan of up to 50 percent, the remaining funds must be paid by the borrower. Nordea Bank has other requirements. At this bank, a loan for the purchase of a plot of land may be granted for a maximum of 20 years. Also Jeff Bank for LTC loans limits LTV to 50 percent and sets a repayment period of no more than 20 years.
Not all plots for a loan
When choosing a plot to be financed with a loan, keep in mind that banks are not willing to provide loans for all types of plots. Each bank will credit a construction plot. However, problems arise if it is a summer or recreation plot. Some institutions are willing to credit the purchase of such land, but only on condition that they secure themselves on another residential property. However, we will find several banks where, after meeting certain conditions, we will also be able to secure ourselves on the real estate being credited. At Bank Orange Sophia we will obtain such financing, but only on condition that 20% of our own funds are contributed. For comparison, we are able to finance a construction plot in this bank up to 100 percent. Credit Agricole will credit the summer plot on the same conditions as the construction one.
Financing a habitat plot can also be a problem in many banks. Sometimes the area of the plot itself is also important for the bank’s decision. At Bank Millennium, if the habitat has an area of up to 0.5 ha, then the bank will grant a loan of up to 100 percent of the property value. However, if the area exceeds 5000 m2 then the borrower must make a 40 percent own contribution.
When granting a loan for the purchase of a plot other than construction, banks often suggest location. If it is a property located in an urban agglomeration, then by way of derogation some banks are willing to grant a loan for the purchase of such land.
The purchase of a plot of land for the construction of a house on credit also means gathering more documents than when buying a flat. First of all, the bank will require a document confirming the status of the plot, i.e. whether it really is a construction plot. This is one of the basic documents 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. It will also be necessary to provide decisions on 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.
Time to build a house
When we have a plot, it is time to build a house. When we also want to build this, using funds borrowed from the bank, we must remember that a common feature of almost all banks is the inability to simultaneously grant a loan for the purchase of a construction plot and construction of a house. When applying for a loan to build a house, we must already have a building permit, and we can only obtain this document if we already own the land. Therefore, usually banks grant two mortgage loans – one for the purchase of a plot of land and the other for the construction of residential real estate. Usually, it is done so that after presenting the required documents, the loan with which we financed the purchase of land is increased by funds to finance construction works. We can also take a second loan to build a house in the same bank. Another, often cheaper solution may be refinancing the loan for the purchase of a plot of land and transferring it to another bank, which will also finance the construction.
However, that several institutions will be willing to finance the purchase of a plot of land and the construction of a house on it with one loan. Then, first the funds for the purchase of land are released, and only after obtaining permission to build a house, the remaining part of the loan is disbursed. In this way, we can apply for a loan, among others, at Bank Millennium, Eurobank or BGŻ. In addition to the documents related to the status of the plot, we must attach the construction project chosen by us to the loan application. After the purchase of the plot, we must obtain a building permit and only after presenting this document the payment of funds takes place
A much simpler situation is when we buy a plot with a building permit already issued for the seller. Then, we can apply for a loan for the purchase of the plot and construction according to the project and permit in every institution. The only condition will be the rewriting of the building permit from the seller to the borrower.