What is a Land Mortgage?
A land mortgage is a type of mortgage loan which is used to purchase land or a lot, in contrast with a structure which has been built on a piece of land. Buyers of raw land usually purchase land with the intent of developing it or establishing a structure. Land mortgages are different from mortgages for structures because, from the point of view of a bank, land is a less secure investment. If someone defaults on a land mortgage, the bank will be left with an empty lot which could be difficult to resell. Typically, banks have different requirements for land mortgages. Getting a land mortgage may require a higher percentage of the sale price as a down payment, ensuring that the borrower has substantial equity in the land. The borrower may also be obliged to purchase mortgage insurance or to offer up another form of collateral to support the loan, such as a property in another location. Another concern with a land mortgage is the ability to build on or otherwise utilize the land. Banks as
