The UK association of Bridging Loan Lenders

Bridging Loans for Land

With land bridging finance, the security is land on which there are no buildings. That land may have planning permission granted for the construction of residential or commercial properties or it may not.

You can either use a land bridging loan to:

  • purchase land on which there are no buildings or
  • raise money from the equity present in the value of the land you own.

Securing a land bridging loan where there is planning permission

With a bridging loan to purchase land for which there is already planning permission, you may borrow up to 70% of the value of that land. Your lender will require a first charge on the land.

You can request that the bridging loan lasts for up to 12 months during which you can: 

  • apply for changes to the planning permission granted, 
  • engage architects, 
  • select construction firms to carry out the work, and
  • raise the funding required to commence the project.

If, however, you will require the work to begin straight away once you own the land, you may benefit from speaking with a development finance specialist instead.

Obtaining a bridging loan for property development where there is no current planning permission

You can use a bridging loan to purchase land on which there is no current planning permission. Your lender will require a first charge on the land.

The market for purchasing land is very competitive and you may need access to funding quickly to secure a purchase. Although there is no planning permission currently granted, you will be aware of the types of development which exist neighbouring that land meaning that you believe that the granting of permission for a scheme is likely.

You can request a term of up to two years during which you can apply for planning permission for the type of development you believe is most likely to realise the greatest return for you.

Please be aware that bridging loan lenders will generally only fund up to 60% of the value of the land as it is without planning permission.

Using a land bridging loan to raise finance

You may apply for a land bridging loan to raise finance from any equity which exists in the land you currently own. Equity is the difference between the market value of the land and the outstanding balance on any financial product secured on the land.

If you apply for a land bridging loan for this purpose, your lender will require a second charge over the land.

Why might I need a regulated bridging loan to purchase land?

If you intend to purchase land with a land bridging loan and use the funds from the loan to build a property in which you and your family will live, this requires a regulated bridging loan.

These types of bridging loans, like mortgages, are regulated by the Financial Conduct Authority. If you intend to build residential property which you intend to let out or sell on completion, you will require a standard land bridging loan and, depending on time scales, development finance – please contact us for more information.

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