Can I borrow money against my house to buy land?

Yes, you can borrow money against your house to buy land by using your property as security. This can be achieved through options like a re-mortgage, a second charge mortgage, or a bridging loan for land. Many investors and self-builders leverage equity in their homes to secure land purchases, especially when buying land with or without planning permission or when aiming to fund development projects.

Using a Re-mortgage to Buy Land

A residential re-mortgage is one of the most cost-effective ways to raise capital against your home for a land purchase. By refinancing your existing mortgage, you can release equity to fund the deposit or even cover the full cost of the land. Standard mortgage rates are usually lower than those offered by land bridging loans, making this an attractive long-term solution. However, a re-mortgage can take several weeks to arrange, which may not be ideal for auction land purchases or time-sensitive acquisitions.

Second Charge Mortgages

If you don’t want to re-mortgage your entire home, a second charge mortgage can be taken against your existing property. This allows you to retain your current mortgage deal while borrowing an additional amount to buy land. This is particularly popular among borrowers who have a competitive fixed-rate mortgage they don’t want to exit early or pay penalties on.

Bridging Loans for Land Purchases

For buyers who need fast access to funds, such as for land auction finance, a bridging loan for land is often the best solution. A land bridging loan is a short-term facility, usually 1-36 months, allowing you to borrow against the equity in your house to purchase land. This type of finance is particularly useful for:

• Buying land without planning permission.
• Securing plots for self-build projects.
• Land banking or site assembly for future development.
• Bridging to development finance once planning consent is granted.
• Bridging loans are flexible and can be arranged within 5-14 days, making them suitable for time-critical land purchases. Lenders will usually provide up to 65-70% loan-to-value (LTV) of the land’s value, with the potential to increase borrowing if additional security (like your home) is offered.

Development Finance as a Next Step

If your plan is to build on the land, once purchased, you may refinance the land bridging loan with development finance. This type of finance covers both the land cost and up to 100% of the build costs, provided the deal meets lender criteria around Loan to Cost (LTC) and Profit on Cost (POC) percentages.