Land can be one of the most lucrative assets available to investors, in that it’s relatively scarce and there’s a huge demand for quality land to buy.
Most house building companies have entire departments dedicated to negotiating and buying land for future use, and the competition for good land with the potential for planning can be absolutely fierce.
That’s why we know from our clients that when it comes to purchasing land, time is often of the essence, and to stave off competition they often need quick help with finance, and especially land finance.
We also have a large range of options for clients if it turns out that land finance isn’t for you.
What is land Finance?
In its simplest terms, land finance is a type of financing that would allow you to buy or develop on a piece of land. It can be used in either a very short term capacity of, say, 1 month, all the way up to five years.
Because most traditional lenders won’t lend for the purchase of land or development either, this is designed as a type of bridging finance. There are, however, land mortgages also available which are designed to much longer term solutions.
You can use this type of finance to fund the purchase of any type of land and these loans are typically very flexible in terms of amount and length of time, which makes them an ideal solution for many of our clients.
Can I get a bridging loan to buy land?
This type of finance is, essentially, a form of bridging finance, so yes, it’s perfectly possible for you to use bridging loans to buy land.
There will often be some slight differences in the categorisation of loans, and some different names given to them, however, broadly speaking, unless it’s a mortgage you’ve arranged then the likelihood is that you’ll be using bridging finance.
Does the land need to have planning permission?
The land doesn’t necessarily have to have planning permission, no, but if it does already have planning permission in place this will make it easier to arrange finance, and it will make your finance cheaper. You can easily arrange finance on land before you’ve managed to arrange planning permission, but the lender may as you about your plans to arrange planning, and whether, perhaps you intend to create a development on the land or build property. If there’s anything you’re unsure of, it’s advisable to reach out and speak to one of our expert brokers about what you may qualify for.
Finance for land with planning permission
It’s much easier to get finance for land with planning permission, either for a commercial or a residential development with property. It means that there’s a much clearer exit strategy from the purchase of the land through to the completion of the loan. Whether you’re planning on building property or something else, what a lender likes to see when you’re looking to arrange finance is that you know how you plan to complete the project and pay off the loan amount you’re looking for. Perhaps more important than anything else is a robust plan for how you plan to use the money and repay it. It also helps enormously if you have experience with these types of projects or are working with a team that have.
Land mortgage calculator UK
To help you get a better idea of what may be available to you and what it may cost, we’ve put together a handy land mortgage calculator. Within this tool, you can adjust the measures within it, such as interest, fees, length of the loan, and the deposit you’re able to afford.
This is designed to be an illustration, however, if you’d like to get more details and speak to us about your specific circumstances, it makes sense to get in touch with us directly.
Here we’ll go over a few of the key features of this type of finance for you.
Ultimately, these loans can flex around your requirements and needs. You can have terms of between 1 month and 5 years, with different interest rates. Because the nature of property development is such that unexpected things can often crop up, this is a really useful feature of this type of finance.
Similarly, this type of finance is much more flexible in terms of amounts that you can borrow than, for example, a mortgage. When you’re looking to buy, develop or hold on to land, it’s a very fast moving situation and you need fast access to different levels of capital.
This type of finance for land and development will allow you to borrow anywhere from around £50,000 to upwards of £5,000,000 depending on your circumstances.
Bad Credit Accepted
With this type of finance, you can be assured that your credit history isn’t the be all and end all, and not the most important part of your application. We can work with you even if you’ve had problems in the past, we work with a wide variety of lenders who take on differing levels of risk.
Many of our lenders are willing to take a wide variety of assets as security on your loan. The level of your deposit can vary too, and our lenders are willing to look at 1st charge security on a property, 2nd charge on a property, equity or even joint ventures, so there’s lots of options.
Gread Loan to Value
In most examples our clients are able to get a good loan to value on their finance. Most of our lenders are able to provide finance for up to 75% of the open market value of your development or land, but this will vary.
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Can I get agricultural land loans?
Absolutely this is something that we can help you out with, but this is a more niche area of finance for land. We do work with a wide and diverse panel of lenders who are more than willing to take a look at these types of loans.
Again, though, what a lender will want to see from you in terms of a proposal or application is how you intend to repay your loan in the long term, so that means you need to know what you’re using the funds for, how long you need them and what your exit strategy is.
When it comes to agricultural land, you’ll need to be aware of what the end game is if you’re intending to take out any form of bridging or loans. If your long-term intention is to, for example, develop the land and then organise a mortgage, then that would constitute your exit strategy.
Speak to our land finance brokers today!
Finding finance or loans to purchase land, especially land for development, can, at times, feel a little confusing and intimidating.
However, we’ve got a large and diverse panel of lenders that we’re able to put you in touch with that can offer you exclusive terms and rates. We have spent years building our relationships with them.
More importantly, our brokers are here for you, and are here to help you every step of the way. Don’t forget, we have access to many different finance products for land and development, so why not get in touch today to see how