Is ownership of a site seen as equity?

wiggles1980

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We own a site we want to build on. Does anyone know if ownership of the site would be looked upon as equity in the eyes of a bank when seeking a mortgage to build?
 
It use too, as long as it has planning on it. But I doubt they would take it as equity any more as building cost can now out-way the value of the home once its finished depending on where it is.
 
In terms of being part of the value of a completed house: yes.

As indicator of your capacity to fund mortgage repayments: perhaps not (it depends on how you acquired the site).
 
thanks for replies. its family land we wish to build on. would this be helpful towards obtaining a mortgage to build? Is it seen as 'savings/money' on a mortgage application??
 
I presume you got the site free of charge. Of course that is great for you in lots of ways, but you possibly have no record of putting money aside on a regular basis. The absence of a savings record is a a bit of a disadvantage: it's harder to prove to the bank that you have the capacity and the habits that enable you to make repayments on a mortgage.

You're not dead in the water, though. It's certainly worth discussing it with the bank.
 
Assuming that the site was free or had a nominal charge, there are a number of benefits. You should have more savings to put towards the project. The amount of loan should be smaller relative to earnings as you are not borrowing for the site cost. The loan to value ratio should be lower which reduces the risk for the bank.

I doubt that any bank would look at it as savings or money in the current climate. If you ran in to trouble with the cost of building the house, you can't exactly sell the site to assist you to finish the project. Owning sites other than the one that you are building on may be viewed differently.
 
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