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Using land as collateral to buy a house


I have been given a peice of land valued at $110,000.00 but do not want to build in the area where the land is located. It has been in the family for many years and I do not want to sell it either. Can I use this land as collateral to buy a home somewhere else? I have been told by one person that I can not unless I put a small cottage or home on this property??? If this is the case what are the requirements of this cottage for it to qualify so I can use it????


adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Charlena,

You will have to contact a lender who can offer a land loan. Once you receive the money, you will be able to use it to buy your home.

Like | Dislike | Share | Posted: Mon, 09/23/2013 - 00:27

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I would like to know how do I go about using land fo collateral to purchase a houise. Please call Charlena Singleton at 843 952 8786 as soon as possible.

Like | Dislike | Share | Posted: Sat, 09/21/2013 - 11:33 | Post subject:

howard.nugent's picture
howard.nugent | Joined: November 17, 2009 12:42 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

In today's lending environment, you'll find it difficult to do anything with the raw land.

For example, with my previous employer, the maximum cash-out on raw land was $25,000. This would be using a lot loan which typically carried a balloon payment in 5 years.

In the mortgage world, you're best considering this land as a liability instead of an asset. We count the property taxes in your debt to income ratio, which lowers your purchasing power.

You can't cross collateralize a mortgage (one mortgage against multiple legal land units.) So you're basically going to just have to take out a loan on the new home you want.

Like | Dislike | Share | Posted: Mon, 03/15/2010 - 16:12

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

I agree with Howard. In these tough economic times, no lender would want to offer you a loan against raw land. There has to be a house on it for you to get a loan against it. Moreover, you cannot take out a loan against the land and build a home somewhere else. If you are going to build a home somewhere, you need to use it as collateral for the home loan. You cannot build a home using some other property as collateral for the loan.

Like | Dislike | Share | Posted: Mon, 03/15/2010 - 22:24

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