How can I make Money off my Land
You can use land to secure a loan, although it is not easy. This is more so if the economic times are hard and the land is undeveloped. Compared to vehicles and other assets, a landowner would easily let go of land in case they are unable to clear the loan. Lenders also have a difficult time trying to repossess it.
You can use your land as security for a loan, but it depends on the type of a lender, the type of loan, and how prepared you are.
How It Works
Using your property as security involves permitting a lender to put a lien on it in exchange for a loan. If at one point, you are unable to repay the loan, the lender will sell the land and recover their money. Although this is risky on your land, it makes it possible for you to get the money.
There are tips that can help you use your land as security to get a loan and here are some of them.
Choose The Right Lender
Unlike larger lenders, small lenders like local banks, credit unions, and private lenders are likely to offer loans that are secured with land. This is regardless of whether the land has a home or not. However, you have a high chance of getting different types of loans if your land is developed. This is why you should choose a creditor who is not really interested in the status of your land and whose terms are favorable to you.
Go For a Specific Type of Loan
Empty land is unlikely to attract lenders since it is not an appealing security. However, you can use it to get a construction loan. This is a type of loan given to people with vacant pieces of land that they wish to develop. Most lending institutions give a grace period of 6 to 12 months after construction for you to start repaying the loan. The amount of money you get from the lender depends on the construction cost and equity of the land. Nevertheless, you must pay the loan even if the amount you are given was not enough to finish the building.
Loans are not given easily and therefore you have to prepare well and get a good plan to get one using your land as security. One of the things you must do is ensure that your credit score is healthy. Banks are keen to look at your deposit and withdrawal transactions for a particular period of time. The other factor that will increase your chances of being given a land-secured loan is the accessibility of the land. Lenders give loans against accessible lands easily.
It is possible to be given a loan using land as collateral. Nevertheless, you must choose the right lender, go for a specific type of loan and be well prepared. These tips will make it easy for you to access a loan.
Before buying land this is how to search for land ownership in Kenya. Let Denver Group Limited be of assistance while buying land, since our plots have ready Title deeds.