Self real state development loans

The real state development loans are the loans grant by the banks for construction of buildings. These loans take into account the different stages on the construction of a building, from the purchase of land, the building construction and even its possible sale to third parties.

In essence and schematically, assuming that the house is built for you, that is a self real state development, there are three phases to the operation of the Loan:

Phase 1

• Option A (usually the least costly)
  • in this phase, will be granted a bridge loan between 60% and 70% of the value of the land for a period of one year (only interest will be paid not the given credit, which will let you keep saving)
  • At this stage and for a maximum one year term you should buy the land, the Implementation Plan and the construction Licence.
• Option B
  • A way to avoid the bridge loan is the use of a Purchase-deposit Contract (contrato de arras), which consists in the payment of a signal with a deadline for payment of total amount (this period depends on what is stipulated in this Contract).
  • And so, within that time, manage to get the architectural project, construction license and property appraisal to get at once the Building and Land Loan, being able to obtain greater funding up to an 80% of the total.

Phase 2

• Once approved, the next phase will give the money over time (with done construction certification). The first amount would be corresponding to the payment made in the previous phase.
• The total amount that is usually given at this stage is 80% of the appraised value of the completed building (including the land) but may vary.
• As in the previous phase you will pay only the interest (on the duration of the works) so you can keep saving.

Phase 3

• In this final stage, you would have to pay the loan normally, part of the loan plus interest, until the end of it.

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