14th May 2019

Bridging Finance for Land

Bridging Loans Are Not Just for House Purchases

Bridging finance solutions do more than just expedite home purchases and help cover unexpected bills. They also make the acquisition of land that much easier. Personal and commercial bridging loans are available for almost anything that’s property-related – including land without planning permission.

While short term bridging loans are commonly sought for quick access to funding, they can also be used to cover the initial cost of a purchase while you refinance or secure a longer-term loan. That makes them perfect for situations where you want to buy land first, and apply for planning permission second.

Once your build plan’s been approved, all you have to do is refinance with a property development loan, and you’ll be ready to move forward with your investment.

Is Bridging Finance a Good Idea for Land?

Bridging finance for land, whether it involves a self-build or development plot, agricultural land – or even a car park – offers a number of distinct advantages over traditional loans, including the following:

  • You can often qualify for a bridge loan even if you have bad credit,
  • Bridging finance can usually be repaid any time over the term of the loan, with most exit strategies (including refinance, sale, or equity) considered,
  • You may have the option to roll monthly interest amounts into your loan, letting you avoid any repayments along the way, and
  • Bridging loans in the UK are plentiful and highly competitive

Bear in mind that, regardless of how quickly bridging loan companies operate, you should still expect to wait anywhere from 7 – 14 days to have your loan approved. And in most cases, the less work that’s required to process your land bridging finance, the faster you can expect to receive funding.

A good example of this would be longer wait times for land purchases where the legal work has yet to begin, versus shorter wait times for land equity bridge funding where all that’s required is a property valuation.

Exploring the Cost of Bridging Loans

“How much does a bridging loan cost” is a common question where financing a land purchase with the help of short-term funding is concerned. Before we look at rates, however, you should understand a couple of key points:

  1. The amount you can borrow with a property bridging loan varies, but typically maxes out at 75% of the land’s value.
  2. Most bridging loans are offered for a term of 1 – 18 months, but they can go as long as 36 months.

You probably won’t be surprised to learn that bridging loan interest rates vary, depending on factors like property location, intended use, and whether or not planning permission has been granted.

Land that’s situated in a good location with building permissions intact, for example, could qualify for a monthly interest rate of 1% or less. Property in a less desirable area that also lacks planning might be subject to rates as high as 1.5% monthly. You should also be aware that bridge loan rates typically include an arrangement fee, which can equate to 1%-2% of your loan amount.


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