Bridging Finance for Land 

A bridging loan for land is a short-term, interest-only loan secured against a parcel of land, typically used for property development or investment purposes. It provides immediate capital to purchase land or finance land-related projects when traditional funding options are not viable due to time constraints. This type of loan is particularly useful for developers and investors looking to acquire land quickly, especially in competitive markets.

You can take out a bridging loan to buy land – this is one of the most common and straightforward ways to use this type of finance. However, you’ll also be able to use this type of finance in other ways, which include:

• In cases where you want to buy land quickly – especially if it represents a good investment opportunity or there are other competing buyers
• To purchase land and finance a planning application 
• Buy land that already has planning permission that you will go on to develop

Most lenders offer a maximum of about 75% LTV for land bridging deals where you already have planning permission (if any is needed), although this can be lower, even if you have the permissions you need. Lenders look carefully at the location and value of the land and your plans for it, as well as your exit strategy and the overall risk of the deal when it comes to working out what LTV they will offer. 

If you need to borrow more, some lenders will accept additional security in return for a higher LTV. However, you will usually require the help of a professional adviser to arrange these deals and assess the assets (usually real estate, but lenders can consider other asset classes) you can put forward as security to support this. 

The amount lenders will offer you in relation to the value of your land can vary on other factors, depending on your plans for the land, exit, your experience, and the loan size. In deals where there is a potentially higher risk (for example, if planning permission is pending), lenders offer lower LTV as standard – about 50% LTV is usual.

Land bridging finance is always a short-term lending product. There is no minimum term, and you can borrow for just a few weeks or months. You will usually use very short land bridging loans if you need to borrow capital to make a land purchase but have a longer-term refinancing deal nearing completion. 

Land bridging loans have maximum terms of about three years. Usually, you will exit via refinancing or by selling the land after you have completed the development.

You can always draw down bridging loans quickly – around two weeks is typical. If you have already had a valuation carried out on the land, you have a legal team and all your documentation in order, you will usually be able to draw down a land bridge loan much faster, sometimes in as little as seven days.

Yes, some lenders offer bridging loans if the land you will buy doesn’t have planning permission. However, they will assess each borrower that wants bridging finance for land with no planning permission on a case-by-case basis, and they will usually offer lower LTV for these deals. Around 50% LTV is usual, but sometimes we can arrange slightly higher LTV if we can bring more comfort to the lender about how probable it is that you will get the planning permission you want. 

Your exit will be the centre point of your ability to access a land bridging finance. Here, lenders will be looking at how you will repay the loan. While multiple options are available, the most common are refinancing or selling the land and development and using the sale to fund the repayment of the loan.

If you want to refinance, lenders will look at how easy it will be for you to secure long-term finance and the value of the land after you have developed it. 

Bridging loans for land can be utilised in various scenarios, including:

• Purchasing land: Acquire land quickly, especially in competitive markets where speed is essential.
• Financing planning applications: Secure funds to apply for planning permission on land you own or intend to purchase.
• Development projects: Fund the construction of residential, commercial, or agricultural developments on the land.
• Land with existing structures: Purchase land that includes existing buildings for renovation or redevelopment.

These loans offer flexibility, allowing borrowers to act swiftly on land opportunities that may otherwise be missed.