{"id":244007,"date":"2019-09-20T13:16:52","date_gmt":"2019-09-20T12:16:52","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=244007"},"modified":"2025-04-15T09:48:00","modified_gmt":"2025-04-15T08:48:00","slug":"personal-loans-to-buy-land","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/personal-loans\/personal-loans-to-buy-land","title":{"rendered":"Land loans: Financing a land purchase in the UK"},"content":{"rendered":"
Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.<\/div><\/article>

It\u2019s possible to get a loan to buy land, either by securing the loan on the land or on another asset, or by applying for an unsecured loan.<\/p>

What is a land loan and how does it work?<\/h3>

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, plus interest, in monthly instalments over a set term.<\/p>

A piece of land is seen as riskier collateral for a loan than property, because it can be harder to value and to sell, so interest rates for land loans can be higher compared to traditional loans or residential mortgages.<\/p>

According to figures from the National Custom and Self Build Association, 1 in 3 people are now interested in building their own home. However, buying land to build on can be expensive, and as a result, most of us would need to borrow to make that dream a reality. A land loan is one way to do this. However, a self-build project isn’t the only reason to buy land… you may want a bigger garden, or perhaps you’re buying a parking space \u2013 there could be any number of legit reasons.<\/p>

Can you get a loan to buy land in the UK?<\/h3>

Not every lender will be willing to offer you a personal loan to buy land in the UK. You will need to demonstrate to the lender that it\u2019s a worthwhile purchase, and that you\u2019ll be able to repay the loan.<\/p>

Which type of loan is best for land purchases?<\/h3>

There are a number of options to explore when financing your land purchase: <\/p>

Personal loans<\/h4>

Personal or unsecured loans<\/a> allow you to borrow a fixed sum over a set term, usually between 1 and 7 years. You won\u2019t need to use the land or any other asset as collateral, which means you don\u2019t need to worry about losing that asset if you can\u2019t keep up with your loan repayments.<\/p>

But on the flip side, you may be limited in how much you can borrow. You can typically apply to borrow up to \u00a325,000, depending on the lender.<\/p>

For larger land purchases, this is unlikely to be enough. But if you\u2019re just buying, say, a parking space, or a few metres of land from a farmer, then a personal loan might cover it – as long as you can find a lender to offer you the loan, with repayments you can afford. Your monthly repayments may be higher with a personal loan than with other financing options, as the interest rates may be higher and you will have to repay your loan within a shorter time.<\/p>Check your eligibility with a range of lenders

Secured loans<\/h4>

If you use a secured or “homeowner” loan<\/a>, you secure the amount borrowed against an asset. This could be your home, or it could be the land itself.<\/p>

This is riskier for you than a personal loan, because if you don\u2019t keep up with your repayments, the lender can force you to sell the asset to recover its funds.<\/p>

However, this security also reduces the risk for the lender, which means that, compared to personal loans, you can usually borrow more, interest rates can be more competitive, and terms can be longer – sometimes as long as 25 years. Secured loans can also be more accessible for those with poor credit ratings, but because of the risk to the asset you\u2019re using as security, it\u2019s very important than you only apply if you\u2019re confident you can keep up with your repayments.<\/p>Compare secured loan quotes for your land purchase<\/a>

Bridging loans<\/h4>

Bridging loans<\/a> are a type of short-term finance that can be used to purchase land quickly. This can be a flexible way to borrow, with loan terms varying from 1 month to 3 years, depending on the lender.<\/p>

Most bridging loans come with higher interest rates than traditional mortgages, usually advertised as the rate per month. For example, if the rate advertised was 1.5% a month, this would translate to an APRC of 18%. However, the beauty of bridging loans is that you don\u2019t generally make monthly repayments, instead paying a lump sum at the end of an agreed term (such as the end of a construction project).<\/p>

You can typically borrow upwards of \u00a325,000, but you\u2019ll 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.<\/p>Compare bridging loan quotes for your land purchase<\/a>

Mortgages<\/h4>

Land loans usually only have terms of 2 to 5 years. But if you\u2019re getting a loan to buy land and<\/em> build a house on it, you might be able to apply instead for a self-build mortgage that offers a term of 25 to 30 years.<\/p>

How to get a loan to buy land<\/h3>

As with choosing any loan, you\u2019ll need to compare your options carefully and then select the loan that best meets your requirements.<\/p>

When applying for a land loan, you will need to provide the following details:<\/p>