Before getting into details on how you can get a loan to build your house, let’s mention that applying for construction loans can be a long and hard process if it’s not done the right way or with professional help. You could be asking yourself: how can I obtain a loan for the construction of my house? Well, with the help of a real estate broker, you can get it through a simpler process.
If you already have your own land, but you do not have enough capital to start the construction of your house, you can find the solution to this problem within the real estate market.
Currently, there are many financial entities that are offering credits to build on a particular piece of land, which will allow you to acquire the money you need to build the house of your dreams.
However, obtaining loans is usually somewhat complicated and has some important disadvantages. For example, most institutions will only lend you 70% of the value of the land (in some cases it is only 50%).
Therefore, if you acquire land at a very low cost and want to build on it, the mortgage loan will not be high, which will mean that you won’t get the necessary capital to start the construction.
However, if you have a high value land, this could be the opportunity you’ve been looking for.
Now, the requirements, as well as the loan percentages, will vary from one bank to another. However, there are some that are very common:
You must guarantee the bank that you have the capacity to repay what they are lending you. This can be done through payroll receipts in the case of salaried people or through account statements if you have your own business.
As with income, you must give the bank certainty that you will not lose your job or that your business will not close in a short time. In general, to comply with this requirement, you must submit documents that prove your seniority in the job you currently carry out or the seniority of your business.
As in any other home loan, having a good history is essential in approving your credit for construction. If you do not have good references, it is most likely that the answer to your application will be negative, although with the help of a professional advisor you could obtain it.
Each bank has developed its “controls” to guarantee that the amount they have lent you is used in the construction of your house. For this reason, some will not give you the total amount of money when contracting the credit but will make deposits as the construction of the house progresses, others may request higher commissions, in some cases a construction deadline is given, etc.
You have to be very careful because construction loans have different variables that can surprise you if you don’t pay attention. To make the whole process easier, you can request the help of a real estate broker who will explain and compare for you all the credits that are offered in the market.
