Using plot of land as security on Mortgage?

C

ca_dub

Guest
Hi there - my wife and I are first time buyers and are looking to see how much we can afford. I've visited all the affordability calculators etc i can find but i have a query regarding a plot of land that is in my wifes name (from her parents farm) and how this may affect how much we can afford.

The plot of land (in Ireland but in a different county than where we want to buy) is worth approx 100K. My wife does not want to sell it, nor build a property that we can rent. So how can we use this plot of land to increase the mortgage we can afford?

I guess the bottom line question is how does having a plot of land act as security for taking out a mortgage.

Any advice greatly appreciated.
 
In a word - no. Lenders base the amount you can borrow on the amount you earn and the value of the security the mortgage is secure on. If you borrowed money against the site the repayments on that loan would reduce your borrowing capacity. Unless/until you build on the site it can't be used as security for a mortgage.

Sarah

www.rea.ie
 
In a word - no. Lenders base the amount you can borrow on the amount you earn and the value of the security the mortgage is secure on. If you borrowed money against the site the repayments on that loan would reduce your borrowing capacity. Unless/until you build on the site it can't be used as security for a mortgage.

Sarah

www.rea.ie
 
In a word - no. Lenders base the amount you can borrow on the amount you earn and the value of the security the mortgage is secure on. If you borrowed money against the site the repayments on that loan would reduce your borrowing capacity. Unless/until you build on the site it can't be used as security for a mortgage.

Sarah

www.rea.ie
 
Thanks for that Sarah, i think i understand the reasons why the answer is, simply put, no!

To approach it from a different angle: If my wife took out a mortgage/loan against the land (and so pockets around 100K) and i took out a mortgage (under my name only) would this be viable? She is on a relatively low wage so her contribution to our borrowing 'power' is not significant.
 
Firstly she could only take a mortgage against the site if she was intending to build although it might be possible to get a bank loan secured on the land but this will depend on her income - I would guess that the maximum advance would be in the region of 75% max. anyway. Secondly if you are buying a main residence for both of you she will have to go on the mortgage and therefore declare her repayments. Sorry!

Sarah

www.rea.ie
 
Fair enough! So until i can use my powers of persuasion to convince her build on/sell the plot of land it's of no use really! That does make sense and i can see why it's that way!

Thanks again.
 
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