There are many reasons as to why you may want to subdivide your land and property. Let’s say, for instance, you just built a house but the land is far greater in size than your house and personal needs. 

So, you want to make a profit out of it by selling that extra unused acre. Or maybe you are a businessperson or a real estate investor looking to make a profit. And you find it ideal to subdivide the land that you invested in. 

It is important to first check the legality of this. So, can you divide your land with a mortgage? We will discuss it in this article.

Can You Divide Land With A Mortgage?

Yes, you can subdivide your land with a mortgage. It is totally legal for you to divide land that a bank mortgages. 

However, you cannot complete this process on your own. You will need the consent and approval of the bank that you have your mortgage through.

And you will also receive a partial release of the house loan before the deal is closed. The partial release is important as the bank can activate a demand feature clause that will require you to pay the remainder of your house loan in full. 

However, there is no need to worry. Most of the time, banks approve of subdividing land with a house loan. That is because splitting up properties adds a huge amount of value to the land. 

Potential Road Bumps to Dividing Land

The only potential problem that could occur is if the bank checks if you have sufficient income to pay the debts that you have to pay. Even if you are financially secure when you have mortgaged the house the bank will still check your current financial situation. And if you are not in a strong financial situation currently, that could give the bank some pause.

Now that you have learned what you have to know about subdividing your land with a mortgage, let us tell you how to subdivide your land. 

How to Steps: Subdividing Your Land

Step 1

First, purchase a title report that includes a map of your land. This is issued by a title insurance company. 

Step 2 

Next, obtain a map of your parcel from your county or town assessor’s office. 

Step 3

Ensure that the boundaries and easements match using both the title report and the county appraiser’s documents.

Step 4

Learn the regulations for your property and any roadblocks to subdividing your land. You can use your neighborhood association guidelines as a resource. 

Step 5

Talk to the following groups on whether you can subdivide your land:

  • State department of natural resources and county zoning board
  • Tax appraiser
  • Planning board

Step 6

Inform your lender that you plan to subdivide your land

Step 7

If your lender approves of subdividing your land, then acquire the services of a licensed surveyor to measure the land boundaries and divide your land how you want.

Step 8

Create a map for the two parcels that meets the guidelines for your state and county assessors and planning and zoning boards.

Step 9

Apply for approval of subdivision of your land to the local office or board. 

We hope that this article was informative and helps guide you on your land division journey!

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