Property Saviour logo
Call Me Back, Please

Can You Get a Mortgage on Land?

Property Saviour » Mortgages » Can You Get a Mortgage on Land?

Yes, land mortgages are available. However, it is important to note that buying land is considered a high-risk investment by many lenders, so seeking out a specialist lender is often recommended.

Working with mortgage brokers who offer access to a wide range of lending options is beneficial. They can also provide support throughout the process.

Table of Contents

What are the Land Classifications?

In the UK, how land is classified can affect its use, development, value, and the possibility of getting a mortgage. Here are some of the common categories of land:

  • Residential Land: Land intended for use as a place of dwelling, such as single-family homes or apartments, is classified as residential land. To be able to get a mortgage, you’ll likely need planning permission to make sure the land is suitable for residential use, and the building regulations are met.
  • Commercial Land: Land that is intended for business or commercial purposes, such as offices, retail spaces, and industrial properties, is classified as commercial land.
  • Agricultural Land: Land used for farming, forestry, or other agricultural purposes, such as farmland, pasture, and woodland, is classified as agricultural land. You may not need planning permission for this kind of land, but it’s important to check with the local council to make sure it’s suitable for agricultural use, and there are no restrictions or planning requirements.
  • Development Land: Land intended for future development, like building new homes, businesses, or other structures, is classified as development land. This can include land that’s currently undeveloped or in the process of being developed. To get a mortgage, you’ll likely need planning permission before going ahead.
  • Green Belt Land: Land designated for preservation and protection, like a green lung around urban areas, is classified as green belt land. This land is protected from development and is intended to separate urban and rural areas.

So, getting a mortgage on green belt land can be more difficult due to the restrictions and protections in place. You’ll need planning permission as well as considering other options before you can get a mortgage.  Check if land has right to roam first.

Property Saviour says: do your research before buying land in the UK. Without a long-term strategy, buying land can end in disaster, so research areas such as planning, development, and infrastructure.

How Does a Land Mortgage Work?

A land mortgage in the UK works similarly to other types of mortgages. Many of the same checks and considerations are taken into account when taking out a home mortgage, but there are some key differences. Here’s what you need to be aware of:

Release of Funds: Generally, the lender will release the funds in stages as the development progresses. This allows them to ensure that the funds are being used correctly and that the project is going as planned.

Financial Plan: It is necessary to have a financial plan in place when applying for a land mortgage in the UK. This plan should include the proposed development, the costs involved and the expected return on investment.

If the land is for commercial use, a formal and documented business plan and strategy is required. For agricultural land, a business plan for farming the land and income streams must be provided. The lender will assess the financial plan to determine the feasibility of the development and the suitability of the loan.

Repayment Terms: The repayment terms of a land mortgage in the UK depend on the lender and the specifics of the loan.

Common repayment terms include interest-only loans, where only the interest on the loan is paid during the development phase, and capital repayment loans, where both interest and capital are repaid over the term of the loan.

Collateral: The land being developed serves as collateral for the loan. If the borrower defaults on the loan, the lender may take possession of the land to repay the loan.

Property Saviour says: Take your time when preparing the financial plan. Well-constructed business plans are more likely to secure the mortgage at a competitive rate.

It is worth noting that a large deposit is usually required for a land mortgage – normally starting at 20% of the land’s value. Therefore, it is essential to have a clear understanding of the costs involved and to budget accordingly.

Can You Get a Mortgage on Land
In the UK, how land is classified can affect its use, development, value, and the possibility of getting a mortgage.

Do you have Land that you want to sell?

Are you looking to sell your land quickly and hassle-free for cash? Look no further – Property Saviour is here to help! We specialise in all types of land, whether it’s for residential, commercial, agricultural or development purposes.

Our process is designed to be quick and efficient, and our team is equipped to handle any transaction. Plus, we offer competitive prices and guarantee no hidden fees or charges.

We have a track record of successful land purchases, so you can trust that you’re in good hands when you choose Property Saviour.

Our team of experts is ready to assist you every step of the way. Don’t wait any longer – get in touch with us today and receive a cash offer for your land!

auction hammer

Property Saviour Price Promise

  • The price we’ll offer is the price that you will receive with no hidden deductions.
  • Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
  • These valuations or surveys result in delays and price reductions later on.
  • We are cash buyers.  There are no surveys.
  • We always provide proof of funds with every formal offer issued.

We'll Pay £1,500 Towards Your Legal Fees

  • No long exclusivity agreement to sign because we are the buyers.
  • You are welcome to use your own solicitor. 
  • If you don’t have one, we can ask our solicitors for recommendations.
  • We share our solicitor’s details and issue a Memorandum of Sale. 

Sell With Certainty & Speed

  • Our approach is transparent and ethical, which is why sellers trust us.
  • 100% Discretion guaranteed. 
  • If you have another buyer, you can put us in a contracts race to see who completes first.
  • Complete in 10 days or at a timescale that works for you.  You are in control.

Sell with certainty & speed

Share This Article:

Related Articles

Skip to content