4 cases where there is a chance of approval for a loan to purchase land
Last updated: 13 Sept 2025
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Loans for vacant land are highly unlikely to be approved by financial institutions due to the lack of a clear plan for utilizing the land. This is different from loans for residential and business development, which can be approved with a clear blueprint and business plan.
Currently, land prices are rising every year, with some locations seeing increases significantly higher than deposit or loan rates. This has led many to question whether it's feasible to take a risk on a land loan or to secure a speculative land loan, waiting to sell it when the price rises.
The answer may be a bit shattering, but the answer is "very unlikely." Financial institutions will grant a loan for land or investment in vacant land without any development plans. The reason banks are strict about loans for vacant land without a clear development plan is because vacant, undeveloped land is considered a high-risk asset.
4 Cases in Which Banks May Approve a Land Loan
However, there are instances in which banks may approve a loan for vacant land. These include:
Vacant Land in Housing Developments
Some housing developments subdivide and sell vacant land plots to customers for later home construction. Land in housing developments clearly states that it can only be used for residential purposes. Therefore, the purpose of the land is clear and the land has complete access to public utilities. This makes it acceptable for banks to consider loans for this type of vacant land.
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Buying Land and Building a House
In this case, you can obtain a loan for land, but you must provide supporting documentation for your home construction project, including a house plan, construction cost estimate, and a building permit before applying for a loan. The condition is that the purchase must be for building or extending a home.
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Buying Land for Business Operation
Similar to point 2, a business plan must be included to demonstrate business feasibility, such as expanding the business or constructing a factory to meet increased demand for products. Or for fruit orchards or farming.
This requires building plans, construction estimates from contractors, contractor contracts, building permits from the district office, and a business plan (factory expansion plans, machinery purchases, and planting).
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Land that is foreclosed on by the bank
Non-Performing Assets (NPAs) are foreclosed on by the bank from mortgages of business loan borrowers who have defaulted on their payments. Some of these assets are vacant land. The bank may consider granting a loan to purchase land or to purchase vacant land (NPAs). However, these loans often have stricter conditions, such as a maximum repayment period of no more than 10 years, which means borrowers will have to pay higher monthly payments.
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Source of the article: DD Property
Currently, land prices are rising every year, with some locations seeing increases significantly higher than deposit or loan rates. This has led many to question whether it's feasible to take a risk on a land loan or to secure a speculative land loan, waiting to sell it when the price rises.
The answer may be a bit shattering, but the answer is "very unlikely." Financial institutions will grant a loan for land or investment in vacant land without any development plans. The reason banks are strict about loans for vacant land without a clear development plan is because vacant, undeveloped land is considered a high-risk asset.
4 Cases in Which Banks May Approve a Land Loan
However, there are instances in which banks may approve a loan for vacant land. These include:
Vacant Land in Housing Developments
Some housing developments subdivide and sell vacant land plots to customers for later home construction. Land in housing developments clearly states that it can only be used for residential purposes. Therefore, the purpose of the land is clear and the land has complete access to public utilities. This makes it acceptable for banks to consider loans for this type of vacant land.
___________________________________________
Buying Land and Building a House
In this case, you can obtain a loan for land, but you must provide supporting documentation for your home construction project, including a house plan, construction cost estimate, and a building permit before applying for a loan. The condition is that the purchase must be for building or extending a home.
___________________________________________
Buying Land for Business Operation
Similar to point 2, a business plan must be included to demonstrate business feasibility, such as expanding the business or constructing a factory to meet increased demand for products. Or for fruit orchards or farming.
This requires building plans, construction estimates from contractors, contractor contracts, building permits from the district office, and a business plan (factory expansion plans, machinery purchases, and planting).
___________________________________________
Land that is foreclosed on by the bank
Non-Performing Assets (NPAs) are foreclosed on by the bank from mortgages of business loan borrowers who have defaulted on their payments. Some of these assets are vacant land. The bank may consider granting a loan to purchase land or to purchase vacant land (NPAs). However, these loans often have stricter conditions, such as a maximum repayment period of no more than 10 years, which means borrowers will have to pay higher monthly payments.
___________________________________________
Source of the article: DD Property
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