Land loans: Financing a land purchase in the UK

Find out how to get a loan to buy land in the UK and what you need to watch out for.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.

It’s possible to get a loan to buy land, and you have the option of securing the loan on the land or applying for an unsecured loan. Use the table below to compare competitive secured loans by rate, amount and loan term.

Table: sorted by overall cost for comparison (representative APRC)
Name Product Maximum LTV Loan amounts Loan terms Overall cost for comparison
Selina Selina FlexiLoan
£25,000 to £1,000,000
5 to 25 years
4.1% APRC
United Trust Bank Ltd Secured Loan
£125,001 to £500,000
3 to 30 years
4.3% APRC
Shawbrook Variable Secured Loan
£10,000 to £500,000
3 to 25 years
4.5% APRC
Shawbrook Fixed Secured Loan
£10,000 to £500,000
3 to 25 years
4.7% APRC
Masthaven Bank Flexible Secured Loan
£10,000 to £150,000
3 to 35 years
4.9% APRC
Optimum Credit Prime Rate Secured Loan
£7,500 to £200,000
3 to 30 years
5.1% APRC
Equifinance Standard Secured Loan
£5,000 to £150,000
3 to 25 years
9.5% APRC
Equifinance Adverse Secured Loan
£5,000 to £150,000
3 to 25 years
10.2% APRC
Spring Secured Loan
Spring Secured Loan
£5,000 to £1,000,000
3 to 25 years
10.5% APRC
Clearly Loans Exclusive Secured Loan
£5,000 to £100,000
4 to 20 years
10.7% APRC

Compare up to 4 providers

Overall representative example
If you borrowed £34,000 over a 15-year term at 8.26% p.a. (variable), you would make 180 monthly payments of £370.70 and pay £66,726.00 overall, which includes interest of £28,531.00, a broker fee of £3,400.00 and a lender fee of £795.00. The overall cost for comparison is 10.8% APRC representative.

The desire to buy land is increasing all the time, with one in three people now interested in building their own home, according to figures from the National Custom and Self Build Association.

However, buying land can be expensive, and as a result, most of us will need to borrow to finance our dream purchase. A land loan is one way to do this.

What is a land loan and how does it work?

As the name suggests, a land loan provides you with money to buy a plot of land. Similar to other types of loans, a land loan lets you borrow a fixed sum of money that you repay to the lender in monthly instalments over a set term. Interest will be added on top.

Lenders generally view land loans as higher risk compared to traditional loans or residential mortgages and interest rates can be higher as a result. This is because a piece of land is seen as risker collateral for a loan than property.

Land can also be harder to value and harder to sell if you are unable to keep up with your repayments and the lender needs to recoup the cost of the loan. With a mortgage, the cost of the loan is secured against the value of the property you’re buying and this will generally have better resale value than undeveloped land.


  • APRC. The annual percentage rate of charge (APRC) includes the interest rate and fees to give an indicator of the annual cost of a secured loan. As secured loans and mortgages can offer rates that change over the life of the loan, the APRC is intended to show how different loans may compare after these changes are taken into account.
  • Maximum LTV. The maximum loan-to-value ratio (LTV) is the highest percentage of the value of your property or asset that you can borrow against.
  • Secured loan. A secured loan requires you to use an asset such as a property or a vehicle as security against the loan.

Can you get a loan to buy land in the UK?

You may be able to get a personal loan to buy land in the UK, but you will need to convince the lender that it is a worthwhile purchase and that you will be able to repay the loan. Some lenders may simply refuse to offer you a personal loan for land purchase purposes.

Personal loans do not require you to use land or another asset as collateral. This can work to your advantage as you don’t need to worry about losing that asset if you can’t keep up with your loan repayments.

However, on the flip side, you may be limited in how much you can borrow and this may not stretch to the amount you need for your purchase. Interest rates may also be higher and you will have to repay your loan within a shorter period of time compared to other financing options. This means your monthly repayments will be higher.

Which type of loan is best for land purchases?

There are a number of options to explore when financing your land purchase:

Personal loans

Personal or unsecured loans allow you to borrow a fixed sum over a set term – usually between one and seven years. You can typically apply to borrow up to £25,000, depending on the lender. If you’re just buying say, a parking space, or a few metres of land off the farmer then a personal loan might cover it, but that’s provided the monthly repayments would be affordable for you and provided you find a lender to approve you.

Check your eligibility with a range of lenders

Secured loans

If you use a secured or “homeowner” loan, you secure the amount borrowed against an asset – which could be your home, or the land itself. If you don’t keep up with your repayments, the lender can force you to sell the asset to recover its funds.

However, this security also reduces the risk for the lender and, as a result, you can usually borrow anywhere from £25,000 upwards. Interest rates can also be more competitive compared to personal loans, and terms can be as long as 25 years.

Secured loans can be more accessible for those with poor credit ratings, but only apply for one if you’re confident you can keep up with your repayments.

Compare secured loan quotes for your land purchase

Bridging loans

Bridging loans are a type of short-term finance that can be used to purchase land quickly. Bridging loans for land purchases can be a flexible way to borrow, with loan terms varying from one month to three years, depending on the lender. Most bridging loans come with higher interest rates than traditional mortgages and are usually advertised as the rate per month. For example, if the rate was 1.5% a month, this would translate to an APRC of 18%. However the beauty of bridging loans is that you generally don’t make monthly repayments – instead paying a lump sum at the end of an agreed term (typically at the end of a construction project).

You can typically borrow upwards of £25,000, but you’ll usually only be able to borrow a maximum loan-to-value (LTV) ratio of 75% of the value of the land. Some lenders may allow you to borrow at a higher LTV if you have additional assets to use as security.

Compare bridging loan quotes for your land purchase


Land mortgages usually only have terms of two to five years, but if you’re getting a loan to buy land and build a house, you may be alternatively able to apply for a self-build mortgage that offers a term of 25 to 30 years.

Compare mortgage quotes for your land purchase

How to get a loan to buy land

When looking for a loan to buy land, you’ll need to compare your options carefully and then select the loan that best meets your requirements.

It’s usually easier to borrow money for land that you plan to build a home or business on than it is to buy undeveloped land that won’t be improved. How much land you want to buy also affects whether you can easily get a loan as will local regulations.

You can improve your chances of approval for a land loan by going into the process with a solid plan and a specific piece of land in mind. If you plan to build a primary residence on the property, you further increase your chances of lender approval, while buying land for unknown future uses can result in a denial on your loan request.

It can be expensive to submit planning applications and have them approved, so a lender will want to be certain that you will be able to cover the cost of your plans and still make your loan repayments.

When applying for a land loan, you will need to provide the following details:

  • Your full name
  • Your current and previous addresses
  • Your date of birth
  • Your job title and employer
  • Your salary and household income
  • Other financial commitments, such as a mortgage or credit cards

What can I use a land loan for?

You may be able use a land loan for any of the following:

  • Residential purposes. If you want to buy land to build your home
  • Recreational purposes. If you want to own land on which to fish or hike
  • Agricultural purposes. If you’re a farmer looking to buy farmland
  • Commercial purposes. If you wish to build properties used for your business
  • Mobile home land financing. If you want to own land containing mobile or static homes or caravans.

Can I get a mortgage for a land purchase?

Yes, you can get a mortgage for a land purchase, although it’s usually better to approach a specialist lender than your high-street bank. Keep in mind that the more you can stump up for a deposit, the more likely you are to get accepted.

If you apply for a self-build mortgage, you will usually receive your funds in stages as different parts of the build are completed. Lenders prefer this over giving you one lump sum to reduce the amount of risk they take on and to make sure you spend the money as planned.

Andrea and Mark

Andrea and Mark have found a plot of land costing £150,000 that they wish to buy and build their dream home on. They have £30,000 in savings to use and want to borrow £120,000 with a land loan. They both earn £35,000 a year. They take out a secured land loan over 20 years with an APRC of 8.5%, giving monthly repayments of £1,011.21.

Can I get a land loan with bad credit?

You’re more likely to get accepted for a land loan if you have a good credit score. That doesn’t automatically mean you won’t get accepted for a land loan if your credit score is poor, but it does mean your choice of lenders is likely to be reduced. It’s also likely you’ll pay a higher rate of interest and you may have to borrow a smaller sum of money.

What to consider before you borrow money to buy land

Before borrowing money to buy land, it’s sensible to keep the following in mind:

1. Know what land you’d like to buy

A lender wants to know what you’ll be doing with the land, and going to a lender without knowing the land itself can result in a rejection.

2. Look for land with planning permission in place

Lenders will view land with planning permission as lower risk and may be more willing to let you borrow as a result.

3. Improve your credit rating

The better your credit score, the more likely you are to be accepted for a land loan and the more likely you are to qualify for more favourable interest rates. If your credit score is low, take steps to improve it such as checking you’re on the electoral roll, correcting mistakes on your credit report and paying bills on time.

4. Develop a plan for the property

Prepare a substantial plan for your property, including your estimates of costs and timeline for building on the land. Be specific for your needs, for example, when planning a farm, include costs for purchasing livestock, seed and farm equipment.

Where can I borrow money to buy land?

  • Banks. You may be able to get approved for a loan with most major banks, provided you meet their lending criteria and can provide a detailed plan for what you want to do with the land.
  • Online or alternative lenders. Non-bank lenders may be more flexible in lending money than their traditional counterparts.
  • Owner financing. If you don’t believe you’ll be approved for a loan, you may be able to negotiate a payment plan directly with the current owner of the land.

Pros and cons of land financing

  • You’ll have the opportunity to build the home of your dreams or run your business on your own land.
  • Repayments are often fixed, making it easier to budget.
  • Depending on the type of loan you choose, interest rates can be competitive.
  • Monthly repayments are usually fixed, making it easier to budget.
  • If your loan is secured, you could lose your land if you default on your repayments.
  • You’ll need a good credit score to qualify for the best interest rates.
  • Depending on the type of land you’re buying, you may have to put down a large deposit.
  • If the land doesn’t already have planning permission, you may find it harder to get finance.

Bottom line

It’s more than possible to get a loan to buy land in the UK, but there are certain things you can do to improve your chances of being approved. Having a clear development plan and a good credit score can help you secure a better deal, as will exploring the full range of lending options.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site