Can I use land as security for a mortgage?

[Siobh]

Hello!

I am a first time buyer and unfortunately a little clueless about mortgages so would appreciate some advice.

I have about 20k in savings and was going to use that as deposit for mortgage- however the bank have said they will give me a 92% mortgage and with that and my deposit I would have enough to buy the house but no money left to furnish the interior....

I own a piece of land worth about 40/50k at least and was wondering is it possible to use that as security for a mortgage and how does it work??
I thought then I would be able to use my savings to furnish the house.

Is this possible or am I dreaming??? The house is costing 275,000

Many thanks in advance!

 

[DingDing]

If you use the land as security for the house, it will cause problems if you need to sell the land or do anything with it. You are effictively tying up the land for the duration of the mortgage.

Also budget for the fact that out of your pay you will have to pay the mortgage and the costs of any loan associated the furnishing of it.

You could decorate the house over a number of years as we done, and you could use second hand / borrowed furniture for the first while.

 

[Siobh]

Thanks for your reply DingDing.

I understand that the land will be tied up for the duration of the mortgage. That would not be a problem. We are considering decorating as we go but there would obviously be some things we would need immediately.

Has anyone else used land as security?? How does it work and any more advice would be much appreciated!!

 

[mercman]

Has anyone else used land as security??

No disrespect to you, but the value that you place on the land might quite not be the value the Bank put on it. Using the information to hand in the economy at the moment and I would be surprised if the Bank would take it as security.

 

[Siobh]

Thanks mercman. Like I said I am completely new to all of this so am grateful for opinions and suggestions.

Just trying to find the best solution!!