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I purchased an empty lot next to my house. I'm very glad to have it, but I did naively think that perhaps that I could use this lot as something like a credit card. Using it as collateral for a credit line for home projects and such.

I've since learned that its not as easy as all that. Lot loans have many restrictions and are created to be a precursor to building a home. Land loans, or AG loans, banks usually want to lend hundreds of thousands of dollars, and I'm not interested in near that amount.

Is there a product that might allow me to borrow money against my land (that is a reasonable rate)? Or is this a completely foolish idea and you need to talk me out of it?

EDIT: The lot is worth about $80k US. I would like to get a rate commensurate with the security I'm putting down. Perhaps I'm up in the night, but between 5 and 10 percent ought to be reasonable I would think.

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    Please add a country tag – AakashM Apr 30 at 7:04
  • You can look at HELOC (home equity line of credit, if available in your country), which are loans up to a limit based on the equity in your home (or properties). These are usually higher rates than mortgage, but better than a credit card. HELOCs are not free though, they typically have closing costs and are a much more involved process than credit cards. – Ron Beyer Apr 30 at 14:36
  • @RonBeyer, a HELOC requires a home however. This lot, empty, NEXT to my house, is what I was hoping to use. I dont have enough equity in my main property to do a HELOC on that. – crthompson Apr 30 at 15:29
  • @AakashM, done, thanks for the tip. – crthompson Apr 30 at 16:00
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    @RonBeyer I think a LELOC would be needed here. (I made that up.) But to your point, they probably exist: finance.zacks.com/… – TTT Apr 30 at 19:04
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Short answer is, ANY asset can be used as collateral - you simply have to find someone who's willing to accept it as such.

Since you didn't indicate how much of a loan you want relative to the lot's value, I'll assume you want up to the land's appraised value.

A good source for loans like that would be your local credit union. They have pretty flexible terms and are often much more willing to work with smaller loan amounts than the commercial banks (Chase, BofA, etc). If you aren't a member of one, check into what it takes, but these days it is easy to qualify. If you're a military veteran (or dependent of one) then there are several that cater specifically to that demographic and offer fantastic loan rates.

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