Bridging loans while planning permission is pending
A bridging loan is a good option where you need short-term financing fast. It can be refinanced through an appropriate mortgage at a later stage, and if you are yet to secure planning permission can be an excellent interim measure.
The interest costs are usually much higher on this sort of short-term finance than on a longer-term mortgage, so you need to ensure you have a robust exit strategy in place to repay and refinance your bridging loan.
Commercial mortgages for land purchases
If you are purchasing land to develop a commercial property, then a commercial mortgage might be the most suitable choice.
Using a commercial mortgage to invest in land will usually cost more in interest rates than a commercial mortgage to purchase a premise. Most lenders will cap this sort of lending at a 50% LTV ratio, so you will need to be able to pay 50% of the purchase value as a deposit.
Development finance for land purchases
Development finance is another alternative option and is usually available to experienced developers with demonstrable experience in this field of work. They tend to be short-term forms of lending, which help to purchase the land and cover the cost of the development or building work.
Typically, development finance is available at 100% of the cost of the building work, and up to 70-75% of the value of the land.
Development finance is released in tranches at different stages of the development project, and applicants will need to be able to demonstrate their exit strategy to be able to refinance the debt when the development is complete.
This is usually by remortgaging at the end of the development process through a commercial mortgage, secured against the finished development at its new market value.
A self-build mortgage is an option to cover the cost of the land and to build your house upon it. This is an option for people looking to build their own home, and also for developers looking for opportunities to buy land and build properties on it.
As with development finance, this type of mortgage releases funds in stages, against the progress of the self-build. Usually, the first payment will be released once the land has been bought, and then subsequently at each significant stage of the building project.
This type of mortgage is also a specialist product, and unlikely to be available through many mainstream lenders. If you are looking for self-build mortgage options, give us a call, and we will help you find the self-build mortgage you need.
There are many reasons people choose to undertake a self-build project:
- Flexibility and freedom of the design and build.
- Reduced stamp duty costs, with only the land being subject to stamp duty and more likely to fall under the £125k threshold.
- Potential for capital growth, with an increase in value against the original land cost and the build budget.
Land mortgages for farms
One of the most popular reasons for land mortgages is to buy rural or agricultural land. In this case, a specific agriculture mortgage is usually the most suitable option.
Using a broker to secure land mortgage lending
Many investors looking to purchase land use a specialist broker such as Revolution Brokers to negotiate the terms at which they borrow.
There are lots of complex factors to consider around land mortgages making it a more specialist area than residential mortgages - these include:
- Issues with access and public rights of way
- Zoning regulations
- Environmental issues
Using a niche broker means that we can identify the specialist lenders who understand your land mortgage requirements, and can navigate the jurisdictions and regulations around land mortgages efficiently.
Revolution Brokers work with an established network of lenders across the UK who offer specialist land mortgages and can offer highly competitive rates tailored to your investments.
Give us a call or drop us an email today to discuss your land mortgage plans, and we will help you find the best rates to suit your plans.