In this guide, we will look at everything you need to know about securing a land mortgage in the UK, including the types of land mortgages available, what lenders look for, and how it works.

What is a land mortgage?

A land mortgage is a type of loan designed specifically for purchasing land, rather than a completed residential or commercial property. In the UK, these mortgages are less common than standard property-based loans.

Unlike a traditional mortgage, where the house itself acts as security for the loan, a land mortgage uses the land as collateral. Because undeveloped land has less immediate resale value, lenders are more cautious when issuing land-based loans, leading to stricter requirements and higher interest rates.

Types of land mortgages in the UK

Land mortgages are categorised by type of land and its intended use. Each type has its own unique set of features and criteria.

Agricultural land mortgage

An agricultural mortgage is used to fund farming or agricultural land as a commercial venture. The mortgage can be used to buy or refinance agricultural land and related buildings.

As a mortgage intended for business use, lenders will assess your experience, business finances, as well as your plan for the property before approval. They will also look into the value of the land in terms of fertility, potential income generation and location. Lender’s requirements may vary depending on the above.

Funds for this type of mortgage can be released as a lump sum or in stages of development. However, this depends on the lender’s policy and the scope of your project.

Woodland mortgage

A woodland mortgage is used to purchase forested or tree-covered land for the purpose of leisure, conservation, or as an investment for the future. Compared to other land mortgages, woodland mortgages are difficult to find in the market and can only be acquired through a specialist lender. It also comes with higher interest rates. Lenders use location, land size and intended use for valuation.

If your interests lie in using the land for business, such as timber production, then you will need to obtain a commercial or agricultural mortgage.

Self-Build mortgage

If you are planning to buy land to build your own home, a self-build mortgage is typically required. This type of loan helps finance both the land purchase and the construction of the home, usually covering up to 75% of the total project value.

Before approving a self-build mortgage, lenders generally require detailed plans, a construction timeline, and planning permission to be already in place. Unlike standard residential mortgages, funds are released in stages–starting from the land purchase through to the final stages of the build–rather than as a time payout or lump sum.

If you’re buying land to construct commercial buildings, you will need to apply for a commercial mortgage

To learn more about commercial mortgages, click here: What is a commercial mortgage

How do land mortgages work?

Interest rates

Interest rates on land mortgages are generally higher than those on residential mortgages. This reflects the greater risk lenders take when financing undeveloped land. Rates are often variable and depend on the type of land, whether planning permission is in place, and the strength of your application.

How much can you borrow?

How much you can borrow will depend on the type of mortgage and how well the criteria are met. For example, self-build plots with full planning permission are viewed more favourably than land that has not obtained such permission. Most lenders will offer between 50% to 70% of either the land’s value or, in the case of self-build mortgages, certain lenders may lend up to 100% of the property’s completed value, although this is not common practice.

Mortgage term

Land mortgage terms are usually a maximum of 25 years, but this could differ depending on the lender and type of loan. 

Fees

There are several fees to consider when applying for a land mortgage, including:

• Valuation fees (can be higher than for residential properties)
• Arrangement fees
• Broker fees
• Legal and conveyancing costs
• Early repayment fees

Eligibility requirements for a land mortgage in the UK

As discussed before, land mortgages have stricter criteria for approval with requirements depending on the type of land. In general, land mortgages have the following key differences compared to standard mortgages:

1. Larger deposit requirements

Deposits for a land mortgage vary between 30% to 50% of the land’s value. This is significantly higher than the 5%–10% typically required for residential mortgages. 

Factors that affect your land mortgage deposit are its intended use, your credit score, and lender policy. 

2. Planning permission

If your intention is to build on the land you purchase, lenders require planning permissions in place to approve the loan. This is an important requirement and may affect your interest rate. Without it, your options could be limited and interest rates may be set at a higher level.

Usually a planning permission may already be in place with the land you are purchasing, if it is not you can apply for planning permissions before applying for the mortgage. 

3. Strong credit score and financial profile

A strong credit record and proof of stable income carries weight for land mortgages. Again this is mainly due to the higher risk to lenders compared to a residential mortgage.

Lenders will assess your ability to repay the loan based on your income, assets, and existing liabilities.

4. Clear plan of intended land use 

Whether you are purchasing the land for personal or commercial purposes, you will need to show the lender your plan of intended development and use. Lenders use this to evaluate whether the land will retain its value. 

Where to get a land mortgage in the UK

Land mortgages are typically available through specialist lenders, building societies, or mortgage brokers with access to niche products. Because of its complex characteristics, working with an experienced broker like BVS mortgages can help you go through the process faster and with ease.

Get in touch with our team today and find lenders who offer competitive terms for land purchases, whether for self-build, agricultural, or commercial use. We also guide you through the application process and connect you with lenders most suited to your project.

Disclaimer: The information provided in this blog is intended for general knowledge and informational purposes only, and does not constitute financial advice.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

The commercial lending services promoted here are not part of The Openwork Partnership offering and are offered on a referral basis. The Openwork Partnership accept no responsibility for this aspect of our business. 

BVS Mortgages and Financial Services Limited is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.

BVS Mortgages & Financial Services Ltd is an appointed representative of Commercial Finance Brokers UK Limited which is authorised and regulated by the Financial Conduct Authority (FRN 736199) for the purpose of consumer credit business. Commercial Finance Brokers UK Limited is registered in England & Wales under company registration number 06353973. 
BVS Mortgages & Financial Services Ltd is a broker, not a lender. We work within the mortgage market and may earn a commission from lenders, this amount varies between lenders.

Published on 2025/11/28