Published by Tapton Capital
2026
Can You Get a Mortgage for Land? Financing Options Explained
Land mortgages are secured against land plots, not completed residential properties. In a residential mortgage standard, the security provided by the lender is a habitable home with a well-established resale marketplace. Land is not the primary consideration.
When borrowing to purchase land, however, the land itself is the only security. This fundamentally alters how lenders evaluate risk, value and affordability.
What is a Land Mortgage?
Land mortgages are considered higher-risk investments by lenders because:
- Rental income is not generated by land.
- Resale of land is slower and less predictable.
- Planning permission has a major impact on the value of land.
Land mortgages are therefore not offered widely by mainstream lenders but are instead provided by land and development finance specialists.
Important Note
Many standard lenders will not finance land and advise borrowers to use a mortgage broker who is experienced in land transactions.
Can You Get a Mortgage for Land?
You can obtain a mortgage in the UK for land, but it is entirely dependent on:
Key Factors
- Land types
- The intended use
- The current planning status
- The borrower's financial profile
Land mortgages have a specific purpose, unlike residential mortgages. The borrower will need to clearly state why and how the land will be used.
By reducing the uncertainty of their future land use, borrowers can reassure lenders.
How Land Mortgages Differ from Residential Mortgages
| Feature |
Residential Mortgage |
Land Mortgage |
| Security |
Completed home |
Undeveloped land |
| Risk level |
Lower |
Higher |
| Deposit |
As low as 5% |
Usually 30–50% |
| Interest rates |
Lower |
Higher |
| Resale market |
Liquid |
Illiquid |
| Planning dependency |
None |
High |
Higher risk leads to higher interest rates and lower loan-to-value ratios.
What Types of Land Are Available, and What Is Their Impact on Mortgage Approval?
Local Planning Authorities (LPAs), in the UK, tightly regulate any change in use.
Residential Building Plots
The most attractive mortgages are those with land that has been approved for residential development, either in outline or fully. Planning permission can reduce lender risk and improve valuation certainty. It also increases the maximum LTV.
Agricultural Land
Agri-land is usually financed by agricultural mortgages, and it is often tied to farming income, business expansion, and land investment for the long term. Lenders evaluate agricultural land on the basis of its use, income, and planning restrictions.
Woodland and Forestry Land
Woodland mortgages are a type of agricultural lending. Although woodland is rarely permitted for development, lenders will still consider it when the rights of access are clearly defined, environmental restrictions are well understood, and ownership intent for the long-term is shown.
Commercial Development Land
As part of an overall business strategy, commercial development mortgages may be issued. Lenders will require a detailed plan of business, financial projections and proof that the planning is feasible.
What Is the Role of Planning Permission in Land Mortgages?
The approval of a land mortgage is heavily influenced by the planning permission.
1
Full Planning Permission
At the lowest lender risk. This provides the most certainty and typically results in better loan terms.
2
Outline Planning Permission
Moderate risk. Some uncertainty remains, but the basic development is approved.
3
No Planning Permission
High risk. If you don't have planning permission, your LTV offer will be lower and interest rates higher.
Lenders will also evaluate:
- Change of Land Use Permission
- Local planning authority history
- Environmental and zoning regulations
Self-Build Mortgages Explained
Self-build mortgages combine:
- Land mortgage
- Construction mortgage
Self-build mortgages are released in stages, also known as stage payments, unlike traditional mortgages.
The Typical Stage Release Structure
Stage-based financing reduces the lender's exposure and aligns funding with construction progress.
Land Mortgage Criteria: What Lenders Look For
The LTV and the Deposit
The maximum LTV for most land mortgages is 65-70%.
LTV Factors
- Land with planning = higher LTV
- Land without planning = lower LTV
Deposits can come from:
- First-time buyer discounts (especially for those who are first-time buyers)
- Equity Release from Existing Property
Important Warning
If repayments are not met, the home may be repossessed.
Interest Rates
The interest rates on land mortgages are usually higher than those of residential mortgages because:
- Asset illiquidity
- Planning Uncertainty
- Valuation volatility
Pricing is influenced by the competitiveness of specialist lending markets as well as the Bank of England base rate.
Competitive Rates Available
You can get rates as low as 4% with strong planning status, low LTV, and a clear exit strategy.
Credit History and Affordability
Land mortgages are subjected to enhanced stress tests by lenders. They assess:
- Income Stability
- Existing debt
- Credit Score
- Future affordability
Higher-risk assets require stronger borrower profiles.
Business Plans and Exit Strategies
Lenders require:
- Formal business plans
- A clear exit strategy
Exit strategies can include:
- Refinancing onto a residential mortgage
- Sales of finished development
- Long-term income generation
A defined exit path is always required when bridging finance.
Buying Land at Auction and Alternative Financing
Land purchased at auction usually requires:
- 10% deposit immediately
- Completion in 28 Days
Due to the long approval process for mortgages, many buyers rely on bridge finance.
Bridge Finance Warning
Bridging loans can be expensive and only last a short time. Financial exposure can be severe if you fail to develop a plan of exit.
Hidden Due Diligence Factors Lenders Assess
Even if it is not explicitly stated, lenders will consider:
Due Diligence Checklist
- Title Complexity
- Access and easements
- Utility availability
- Floods and environmental risks
- Soil stability
These hidden factors directly impact the valuation and approval of mortgages.
FAQs
Can I get a mortgage for land without planning permission?
Yes, but it's much more difficult. Without planning permission, you'll face higher interest rates, lower LTV ratios (typically 30-50%), and fewer lender options. It's considered high risk by lenders.
What deposit do I need for a land mortgage?
Most land mortgages require a deposit of 30-50% of the purchase price. The exact amount depends on the planning status, land type, and your financial profile. Land with full planning permission may allow up to 70% LTV.
How long does it take to get a land mortgage approved?
Land mortgage approvals typically take longer than residential mortgages, often 4-8 weeks or more. This is due to the additional due diligence required, including planning checks, valuations, and risk assessments.
Can I use a land mortgage for agricultural land?
Yes, agricultural land can be financed through agricultural mortgages. Lenders will evaluate the land based on its use, income potential, and planning restrictions. These are specialist products typically offered by agricultural finance specialists.
What is the difference between a land mortgage and a self-build mortgage?
A land mortgage only covers the purchase of the land. A self-build mortgage combines land purchase with construction financing, releasing funds in stages as the build progresses. Self-build mortgages are more complex but provide a complete financing solution.
Should I use a mortgage broker for land financing?
Yes, it's highly recommended. Many mainstream lenders don't offer land mortgages, and specialist brokers have access to lenders who specialise in land and development finance. They can significantly improve your approval chances and help you find the best terms.
Conclusion
- Land mortgages are a specialist financial product.
- The approval of a planning permit reduces the risk and improves loan terms.
- Deposit rates and deposits are higher when lenders are exposed.
- Documentation, exit planning, and a clear intent are all essential.
- Specialist brokers improve approval rates by a significant margin.
Land mortgages are possible, but only if you manage your risk, define your purpose, and prepare thoroughly.
Need Help Securing Land Financing?
Let Tapton Capital help you navigate the complexities of land mortgages. Our specialist brokers have extensive experience with land and development finance, helping clients secure the right financing for their land purchase or development project.
Get Free Consultation
Call Now
Published by Tapton Capital
2026
Can You Get a Mortgage for Land? Financing Options Explained
Land mortgages are secured against land plots, not completed residential properties. In a residential mortgage standard, the security provided by the lender is a habitable home with a well-established resale marketplace. Land is not the primary consideration.
When borrowing to purchase land, however, the land itself is the only security. This fundamentally alters how lenders evaluate risk, value and affordability.
What is a Land Mortgage?
Land mortgages are considered higher-risk investments by lenders because:
- Rental income is not generated by land.
- Resale of land is slower and less predictable.
- Planning permission has a major impact on the value of land.
Land mortgages are therefore not offered widely by mainstream lenders but are instead provided by land and development finance specialists.
Important Note
Many standard lenders will not finance land and advise borrowers to use a mortgage broker who is experienced in land transactions.
Can You Get a Mortgage for Land?
You can obtain a mortgage in the UK for land, but it is entirely dependent on:
Key Factors
- Land types
- The intended use
- The current planning status
- The borrower's financial profile
Land mortgages have a specific purpose, unlike residential mortgages. The borrower will need to clearly state why and how the land will be used.
By reducing the uncertainty of their future land use, borrowers can reassure lenders.
How Land Mortgages Differ from Residential Mortgages
| Feature |
Residential Mortgage |
Land Mortgage |
| Security |
Completed home |
Undeveloped land |
| Risk level |
Lower |
Higher |
| Deposit |
As low as 5% |
Usually 30–50% |
| Interest rates |
Lower |
Higher |
| Resale market |
Liquid |
Illiquid |
| Planning dependency |
None |
High |
Higher risk leads to higher interest rates and lower loan-to-value ratios.
What Types of Land Are Available, and What Is Their Impact on Mortgage Approval?
Local Planning Authorities (LPAs), in the UK, tightly regulate any change in use.
Residential Building Plots
The most attractive mortgages are those with land that has been approved for residential development, either in outline or fully. Planning permission can reduce lender risk and improve valuation certainty. It also increases the maximum LTV.
Agricultural Land
Agri-land is usually financed by agricultural mortgages, and it is often tied to farming income, business expansion, and land investment for the long term. Lenders evaluate agricultural land on the basis of its use, income, and planning restrictions.
Woodland and Forestry Land
Woodland mortgages are a type of agricultural lending. Although woodland is rarely permitted for development, lenders will still consider it when the rights of access are clearly defined, environmental restrictions are well understood, and ownership intent for the long-term is shown.
Commercial Development Land
As part of an overall business strategy, commercial development mortgages may be issued. Lenders will require a detailed plan of business, financial projections and proof that the planning is feasible.
What Is the Role of Planning Permission in Land Mortgages?
The approval of a land mortgage is heavily influenced by the planning permission.
1
Full Planning Permission
At the lowest lender risk. This provides the most certainty and typically results in better loan terms.
2
Outline Planning Permission
Moderate risk. Some uncertainty remains, but the basic development is approved.
3
No Planning Permission
High risk. If you don't have planning permission, your LTV offer will be lower and interest rates higher.
Lenders will also evaluate:
- Change of Land Use Permission
- Local planning authority history
- Environmental and zoning regulations
Self-Build Mortgages Explained
Self-build mortgages combine:
- Land mortgage
- Construction mortgage
Self-build mortgages are released in stages, also known as stage payments, unlike traditional mortgages.
The Typical Stage Release Structure
Stage-based financing reduces the lender's exposure and aligns funding with construction progress.
Land Mortgage Criteria: What Lenders Look For
The LTV and the Deposit
The maximum LTV for most land mortgages is 65-70%.
LTV Factors
- Land with planning = higher LTV
- Land without planning = lower LTV
Deposits can come from:
- First-time buyer discounts (especially for those who are first-time buyers)
- Equity Release from Existing Property
Important Warning
If repayments are not met, the home may be repossessed.
Interest Rates
The interest rates on land mortgages are usually higher than those of residential mortgages because:
- Asset illiquidity
- Planning Uncertainty
- Valuation volatility
Pricing is influenced by the competitiveness of specialist lending markets as well as the Bank of England base rate.
Competitive Rates Available
You can get rates as low as 4% with strong planning status, low LTV, and a clear exit strategy.
Credit History and Affordability
Land mortgages are subjected to enhanced stress tests by lenders. They assess:
- Income Stability
- Existing debt
- Credit Score
- Future affordability
Higher-risk assets require stronger borrower profiles.
Business Plans and Exit Strategies
Lenders require:
- Formal business plans
- A clear exit strategy
Exit strategies can include:
- Refinancing onto a residential mortgage
- Sales of finished development
- Long-term income generation
A defined exit path is always required when bridging finance.
Buying Land at Auction and Alternative Financing
Land purchased at auction usually requires:
- 10% deposit immediately
- Completion in 28 Days
Due to the long approval process for mortgages, many buyers rely on bridge finance.
Bridge Finance Warning
Bridging loans can be expensive and only last a short time. Financial exposure can be severe if you fail to develop a plan of exit.
Hidden Due Diligence Factors Lenders Assess
Even if it is not explicitly stated, lenders will consider:
Due Diligence Checklist
- Title Complexity
- Access and easements
- Utility availability
- Floods and environmental risks
- Soil stability
These hidden factors directly impact the valuation and approval of mortgages.
FAQs
Can I get a mortgage for land without planning permission?
Yes, but it's much more difficult. Without planning permission, you'll face higher interest rates, lower LTV ratios (typically 30-50%), and fewer lender options. It's considered high risk by lenders.
What deposit do I need for a land mortgage?
Most land mortgages require a deposit of 30-50% of the purchase price. The exact amount depends on the planning status, land type, and your financial profile. Land with full planning permission may allow up to 70% LTV.
How long does it take to get a land mortgage approved?
Land mortgage approvals typically take longer than residential mortgages, often 4-8 weeks or more. This is due to the additional due diligence required, including planning checks, valuations, and risk assessments.
Can I use a land mortgage for agricultural land?
Yes, agricultural land can be financed through agricultural mortgages. Lenders will evaluate the land based on its use, income potential, and planning restrictions. These are specialist products typically offered by agricultural finance specialists.
What is the difference between a land mortgage and a self-build mortgage?
A land mortgage only covers the purchase of the land. A self-build mortgage combines land purchase with construction financing, releasing funds in stages as the build progresses. Self-build mortgages are more complex but provide a complete financing solution.
Should I use a mortgage broker for land financing?
Yes, it's highly recommended. Many mainstream lenders don't offer land mortgages, and specialist brokers have access to lenders who specialise in land and development finance. They can significantly improve your approval chances and help you find the best terms.
Conclusion
- Land mortgages are a specialist financial product.
- The approval of a planning permit reduces the risk and improves loan terms.
- Deposit rates and deposits are higher when lenders are exposed.
- Documentation, exit planning, and a clear intent are all essential.
- Specialist brokers improve approval rates by a significant margin.
Land mortgages are possible, but only if you manage your risk, define your purpose, and prepare thoroughly.
Need Help Securing Land Financing?
Let Tapton Capital help you navigate the complexities of land mortgages. Our specialist brokers have extensive experience with land and development finance, helping clients secure the right financing for their land purchase or development project.
Get Free Consultation
Call Now
