These loans are needed when you must settle on the land before beginning construction, often requiring 6 to 12 months before transitioning into a construction loan.
Commonly used when a feasibility study indicates that land settlement precedes construction.
Loan Parameters and Adjustments:
Includes options like Loan-to-Cost (LTC) ratio and annual interest, which can be variable or fixed.
Variable interest rates allow adjustments based on market trends, e.g., quarterly rate changes.
Interest Structure Explained:
Monthly interest payments or capitalized interest options are available. Capitalized interest accumulates and is paid when the loan is settled.
Fixed-rate loans simplify management, while variable rates reflect market conditions.
Key Setup Features:
Loan setup fees, amortization period, and other configurations ensure flexibility.
The system accounts for payment scheduling, including months where interest payments overlap.
Formatting and Precautions:
Proper formatting of percentages is critical to ensure accurate calculations. Accidental removal of percentage formats can impact loan projections.
Insights Based on Numbers:
6 to 12 months for land settlement: Indicates the gap before construction and the need for tailored financial planning.
Interest rate adjustments: Quarterly increases, such as moving from 5% to 5.25%, highlight the importance of tracking variable rates.
Understanding Land Acquisition Loans:
Loan Parameters and Adjustments:
Interest Structure Explained:
Key Setup Features:
Formatting and Precautions: