When you have found a beautiful piece of land on which you want to build your own home, you still have a long way to go before construction can actually begin. Today, building land is very expensive and you almost have to take out a loan to finance it. You can take out a loan to finance a piece of building land in two different ways:
- you take out an installment loan,
- you take out a mortgage loan.
Benefits of an installment loan on installment
An installment loan for financing building land has the advantages that a mortgage registration is not necessary as a guarantee for the lender and the borrowing costs are less high than with a mortgage. With the mortgage loan ( mortgage ), a lender will ask for a guarantee and you also have to pay the costs for a notary.
Buying a piece of building land
When you have planned to start building your own home, you first have to look for a piece of free building land that is suitable for this. However, in such a search you must take into account a number of important aspects, such as:
- the location of the building land,
- the profile of the building land,
- any possibilities for the construction of a garden and the placement of a fence.
In order to steer the implementation of your building plans in the right direction later, you can already consult with an architect. Certain pieces of building land will in fact prove to be less suitable for actually carrying out a specific building design.
Borrow money or use savings?
The moment you think you have found a piece of beautiful arable land, so with a favorable location, you have to ask yourself what you will do to be able to pay the cost price. Certain people will use part of their savings for this. Unfortunately, the cost of building land can sometimes be just too high and you cannot release the money completely immediately. In this case, the remaining part of the cost price of the building land will have to borrow. Borrowing money for financing a piece of building land can, however, take place in various ways.
The price of building land today is quite high and, moreover, often requires taking out a loan or credit. Borrowing money to finance your building land can be done in two ways:
- taking out an installment loan,
- taking out a mortgage loan.
Building land loan on installment
An installment building loan is a way of borrowing money without usually providing a guarantee to the lender. The lender will therefore not take a mortgage in this case as a guarantee. Moreover, the costs of a building land loan on installment are also lower because there are no notarial costs involved. However, the interest rate of an installment loan will be higher than that of a mortgage loan and will depend on the amount of the loan. In addition, the maximum term of an installment loan has been set. This term depends on the amount of the loan, but as a rule you take out an installment loan with a term of ten years.
|Characteristics of the building land loan by installment|
|A mortgage registration is not required|
|Lower costs due to the lack of notarial costs|
|A higher interest rate|
|A maximum duration of 10 years|
Building land loan in the form of a mortgage loan
Borrowing money for financing a piece of building land can be continued by taking out a mortgage loan. The lender then takes a mortgage registration as a guarantee and will also charge more costs. You will also have to hire a notary to prepare the notarial deed. With a building loan through a mortgage loan, you can, however, opt for a longer term, for example for a duration of 20 or 30 years.
|Characteristics of a building land loan through a mortgage loan|
|A guarantee in the form of a mortgage registration is required|
|More costs due to notarial costs|
|A lower interest rate|
|The duration is longer, and can be 20 or 30 years|