Buying a building plot: which loan to choose?

Have you found the land of your dreams to build your house? Congratulations, you are now on the road to building your property. Whether it is land to build a primary or secondary residence or even a rental investment, it is always a rewarding adventure.

After having checked the PLU (local urban plan), the demarcation and possibly the servicing, you will know that the building land is in accordance with your expectations. You will therefore have to sign a sales agreement, with an individual or a real estate developer, to block the sale and secure your project.

In the vast majority of cases, you will take out a mortgage or a consumer loan to acquire your building land. But which credit to choose? Take stock before committing!

The financing of the land alone

Although the financing of land is less expensive than that of an apartment or a house, know that it is difficult to obtain a mortgage for a land on which you do not have an immediate construction project. .

Indeed, the banking establishments being able to take guarantees only on the real estate, are rather cautious to grant a loan of real estate nature on a single ground, even building.

If, however, you were in this case, you can perform an online simulation to find out the feasibility of your project or use a broker to find the appropriate financing.

Be careful, however, real estate credit is rarely interesting below 50,000 euros, because of the administration and insurance costs which increase the maturities over a relatively short loan period.

Check that the price of the land you want to acquire and the notary fees related to its purchase are greater than 50,000 euros before considering a mortgage.

In all other cases, it will therefore be easier and above all more profitable to resort to consumer credit, in the form of an allocated or unallocated loan. This type of loan is nevertheless limited to financing not exceeding 75,000 euros.

Financing of land and construction

When looking for building land, this is the most common financial package. You acquire land to build your short-term home.

In this classic case, the banks set up a global loan file aimed at financing both the purchase of the land and the cost of construction. In practice, you will therefore contract a loan under the same conditions as if you were to buy new or old real estate.

The major advantage of using a traditional mortgage is the rate, much lower than that of consumer loans in general. In addition, you can also spread the loan term over a much longer period, ranging from 10 to 30 years depending on your financial capacity, or even 35 years in some cases.

As with any mortgage, the bank will ask you to take a guarantee on the property. It can be a mortgage, a PPD (Privilege of the Money Lender) or a surety.

Ideally and to face the loan maturities to come, you will ensure your debt ratio which should not exceed 33% and you will have a contribution of at least 10,000 euros.

In order to find the best loan that you can benefit from, it is essential to define your project carefully. It will therefore be necessary to know the amount of your contribution, your debt ratio, but also the purchase price of the land, the notary’s fees and the price of the planned construction.

You can also define the amount of finishing work, if you had to finish your construction alone, by covering the walls and floors, or by mounting your fitted kitchen for example.

Once the amount of your land + construction project has been assessed as accurately as possible, you can sign a compromise for the building land and canvass banks with confidence.

Choose the best loan for your building land

In order to find the credit that best matches your personal situation, you will have to compare the loan offers of financial organizations with each other.

It is essential that you compare the APR (Annualized Global Effective Rate). It includes not only the rate of the consumer or real estate loan that you are going to take out, but also the administrative costs in ancillary costs.

Also, in the event that you are heading for a mortgage, compare borrower insurance. Their cost can vary considerably from one insurer to another and it is quite possible to take out this guarantee in “delegation”, that is to say without going through your bank, but through the insurer of your choice. .

To find the most advantageous loan, you can contact a broker specializing in real estate credit, or compare the proposals on the web by putting the banks in competition with each other. Our simulator offers you a reliable and non-binding comparison to finance your building land.