How Do Land Bridging Loans Work in the UK?

What Is a Land Bridging Loan and When Are They Used?

If you’ve ever tried to buy land in the UK, you’ll know it doesn’t hang around for long. Plots get snapped up by developers, self-builders and investors who can move quickly. That’s exactly where land bridging loans come in.

A land-bridging loan is a short-term, secured loan used to buy or refinance land when you either don’t yet qualify for a traditional mortgage or don’t have time to wait for one.

It’s there to plug a funding gap, usually for anything from a few months up to around 1–2 years, until longer-term finance or a sale is in place.

How Land Bridging Loans Work in Practice

So how does that look in real life? Imagine a plot comes up for £300,000 with outline planning permission, and you’re waiting on the sale of your current home or you’re still finalising a self-build mortgage. A land bridging loan can provide most of the purchase price now, with the understanding that you’ll repay it from either the later mortgage, the sale of another property, or the resale of the land once planning is improved.

Security and Loan-to-Value

Like other bridging loans, land bridging loans are secured against property or land. The lender will usually work off a loan-to-value ratio of around 70–80% of the land's value, sometimes lower if the land is agricultural or doesn’t yet have planning permission. You’ll usually need to put in a decent deposit or offer additional security, such as another property you own.

Speed and Why It Matters

The big appeal is speed. While a standard commercial mortgage can take months to arrange, bridging lenders are set up to move quickly, sometimes in a couple of weeks if everything is straightforward. That speed matters with land, especially if you’re buying at auction, where you might need to complete within 28 days and pay the hammer price plus stamp duty and fees almost immediately.

Costs and Interest Rates

Cost is the trade-off. Land bridging loans are short-term and higher risk from the lender’s point of view, so they’re more expensive than a standard mortgage. Instead of paying interest once a year, you’re usually quoted a monthly rate, often somewhere between 0.7% and 1.5% per month, depending on the deal, your experience, the land and your exit plan. Over 12 months, that adds up very quickly, so it’s not something to dabble in casually.

Fees to Budget For

You’ll also face arrangement fees, valuation fees and legal fees, plus possibly exit fees when you repay. On a £300,000 loan, a 2% arrangement fee is £6,000 straight away.

A detailed land valuation can run into the hundreds or thousands. It’s all money you need to cost in from the start, not discover when you’re already committed.

Exit Strategies

One thing lenders care deeply about with land bridging loans is your exit strategy. That’s just a fancy way of saying: how exactly are you paying this back, and when? Common exits include:

• Refinancing onto a development or self-build mortgage once planning is secured

• Selling another property and using the proceeds

• Splitting and selling plots after adding value with planning or services

• Selling the finished development if you’re building homes
  

If your plan is basically “I’ll figure it out later”, you’re unlikely to get far. Lenders want timelines, evidence and a realistic route out, especially if planning permission is still uncertain.

How the Type of Land Affects Lending

The type of land matters a lot. A plot with full residential planning and services in place is far easier to fund than raw agricultural land with no permissions at all. Some lenders simply won’t touch bare land without at least a reasonable planning angle. Others specialise in more complex or speculative cases, but you’ll usually pay more for the privilege.

Loan Length and Interest Options

Most land bridging loans run for around 6–12 months at first, sometimes up to 18 or even 24 months if the project is more involved. You’ll usually have the option to repay early, though check whether there are minimum interest periods. Interest can either be paid monthly from your own cash flow, or “rolled up” and added to the loan, then settled when you repay. Rolling it up helps with cash flow, but it also means interest is effectively compounding, so the total cost creeps higher each month.

Why Bridging Is Often a Last Resort

All of this is why people often describe bridging as a “loan of last resort”. That sounds dramatic, but the point is simple: you use it when speed or flexibility matters more than price. If you can get a cheaper mortgage instead and there’s no time pressure, that will nearly always be the better route.

When Land Bridging Loans Can Make Sense

Where land bridging loans can make sense is when they allow you to secure or improve an asset that would otherwise be out of reach. Maybe you can buy a site at a discount because you can complete quickly. Maybe you can take a scruffy plot with no planning, push a good scheme through the council, then refinance or sell at a far higher value. The extra interest and fees are then the cost of getting to that upside.

Risks and Contingency Planning

If you are considering a land bridging loan, it’s worth being honest with yourself about the risks. What happens if planning is refused? If your house sale falls through? If build costs jump, and your refinance valuation comes in lower than expected? With UK property, most people focus on the potential gain, but with bridging, you really do need a Plan B.

Specialist Advice

Specialist advice helps here. Bridging is a niche corner of the market, and the detail of the terms can make a big difference. Things like whether there are exit penalties, how drawdowns work if you’re buying and then funding works on the same facility, and what happens if your exit takes a few months longer than planned.

Used carefully, land bridging loans can be a practical tool for UK buyers, investors and developers who need to move quickly and have a clear way out. Used casually, without a solid plan and a bit of contingency, they can become an expensive headache remarkably fast.

Disclaimer

This article is for general information purposes only and does not constitute financial advice. Land bridging loans are complex, high-cost financial products that carry significant risks.

Before entering into any bridging loan agreement, you should seek independent advice from a qualified financial advisor or mortgage broker who can assess your individual circumstances, evaluate your exit strategy, and help you understand the full costs and potential consequences if your plans don't work out as expected.

Always ensure you have a realistic repayment plan and consider what would happen if your exit route is delayed or falls through entirely.