How to apply for a loan using land as collateral

Borrowing money in exchange for the value of your own land can be a difficult task due to the fact that the real value of a plot of land is something that flows, highly dependent on market and surrounding forces, as well as a series of other factors related to property valuation. Regardless of the real value of the land, the first step in the attempt to obtain a loan, based on the use of the land as collateral, is to contact a property valuation specialist. This is to carry out a complete evaluation of the property and produce a declaration of its formal value, to be used in the negotiation with a lending institution.

Contact an expert in the valuation of local properties, either by phone or online. If you cannot find a valuation expert, try contacting a local real estate agent for a referral. Hire the valuation expert and ask him to prepare a report on the value of the land in question.

Call a financial institution of your choice to book an appointment with a loan officer. Before heading to the meeting, prepare all relevant documents such as the land title and the valuation statement. Talk to the representative and write down all the important details of the negotiation, such as the interest rate, how often the loan will get worse, monthly or annually, and the actual cash value of the loan offer. Do not accept the first offer given, as you will contact other financial institutions.

Hold meetings with other credit institutions in the area, using the same documentation as before. If it is advantageous to do so, inform the loan agent about the details of the previous offers. Basically if it is offering you a less attractive treatment than that of the previous credit institution in terms of the total loan amount or interest and repayment terms. Take note about the details of the offer of each financial institution to compare them.

Contact an accredited accountant of your choice who has no relationship with the credit institutions that have given you quotes. Take your notes, as well as the property valuation form to the accountant and ask him to advise you on the advantages and disadvantages of each offer and to decide which one best suits your personal needs. The highest offer in monetary value of a loan is not always the best offer. The loan that balances the highest value of the dollar with the lowest interest rate is probably the best option.

Book a follow-up appointment with the financial institution whose offer is the most attractive and formalize the agreement that guarantees the loan.


Some larger properties may have values ​​for secondary resources, such as forest areas or hidden mineral wealth. If you have a large property, especially a rural one, consider hiring a study team to provide a resource exploration report and submit that to the credit institutions.