Why land and building are the best guarantee for providing banking finance?

The reasons are given below :-

     1. Land & Buildings are immovable.

     2. The value will rise generally. 

     3. They are not perishable.

     4. They cannot be stolen.

Because the asset value will increase(General perception) with time in a rapid manner.

While some people search for their dream houses among a pool of houses already built, others prefer to customize their dream homes by building on a specific plot of land. Once you've purchased that land and begun designing your dream home, you'll need to determine financing for the construction, find the right builder and understand zoning restrictions. One option may be to consider a home construction loan or similar product designed to help you with home construction finance, rather than a new home purchase where you would apply for a mortgage.

A fundamental basis for this difference is that, before providing financing for your purchase of vacant land or a construction loan to build your home, a bank needs to understand your plans for the property. The purpose and timing for a purchase money loan is known and obvious – you’re buying an existing home of a certain value at your closing – but there is more uncertainty about the facts, valuation and what the future holds when working with a vacant land loan or a construction loan. Details about the property and your overall story will influence the perceived risk to the lender and help the lender decide whether it will approve your loan. For this reason, land loans and construction loans are often referred to as “story loans.”

An experienced mortgage broker may have more loan options than a regular bank since they usually work with dozens of lending institutions across the country. Because of their variety of lending sources, a mortgage broker often can get you a better loan deal than if you contacted your local bank directly.