Commercial land mortgages and loans

A commercial land mortgage is a loan secured on land bought or held for business use or investment rather than as a home. It can fund a yard, a car park, open storage land or a site held for future development, and it is repaid over an agreed term or at the end of a short loan.

Lending to a business, or to an individual for a business purpose, on land with no home on it is generally unregulated (FCA Handbook PERG 4.4, accessed 20 Oct 2026). Lenders still confirm how the land will be used before an application goes ahead, because land that will hold the borrower's home is treated differently.

Commercial land loans fall into three broad types. A term loan, similar to a commercial mortgage, suits land that earns income, such as a let yard. Short-term bridging suits quick purchases or land bought before planning is granted. Development finance suits land where building work is planned, and it releases money in stages as the work progresses.

Which type fits depends on what the land earns now, what the buyer plans to do with it and how the loan will be repaid. Land with a tenant and a lease is the easiest to finance over a long term, while bare land with no income is usually financed on shorter terms and at a lower loan-to-value.

Lenders check the land's planning status, access, boundaries, ground conditions and any rights of way or restrictions in the title. They want to know how the land will be used, what income it produces and how the loan will be repaid, whether from rent, from the sale of the land or from a refinance once a project is complete.

The borrower's experience, assets, credit history and other borrowing are also assessed. A buyer who has run similar sites or projects before usually finds more lenders than a first-time buyer of commercial land. Environmental searches matter too, because former industrial land can carry contamination that affects both value and what a lender will offer.

Where the land is part of a wider business property, such as a yard next to a warehouse, it may be financed with the buildings on a single loan. How lenders treat business premises in general is covered in the commercial mortgages section, which applies to many land purchases too.

Commercial land usually needs a larger deposit than built property, because land without buildings or income is harder for a lender to sell. The deposit tends to rise for bare land, land without planning, remote sites and buyers with no track record, and it is based on the lender's own valuation rather than the agreed price.

Some buyers offer extra security, such as equity in another property, to reduce the cash needed. Purchase costs come on top of the deposit, including Stamp Duty Land Tax on non-residential land in England, legal and valuation fees, surveys and any planning advice the buyer needs before committing.

Commercial land loan rates depend on the loan-to-value, the land's planning and income, the term and the borrower's experience. Short-term loans are usually priced monthly and long-term loans annually. Rates change often, so a dated quote on the specific site is the only reliable guide to the cost of a particular purchase.

Fees can change which offer costs least. Arrangement, valuation, legal and exit fees all add to the total, and comparing offers on the total cost over the expected holding period gives a fairer view than the headline rate. What moves land pricing in general is explained on the land mortgage rates page.

Commercial land finance differs between lenders on loan-to-value, term, pricing, fees and how they treat bare land, land without planning and first-time buyers. Asking each lender for the same details, such as the maximum loan, the term, the fees and any conditions, gives a like-for-like comparison for a particular site.

Conditions can include a minimum period before the land can be sold, a requirement to obtain planning by a set date, or a cap on the loan-to-value at revaluation. Reading these alongside the price matters, because a cheaper loan with a tight condition can cost more if the plan for the land changes.

A broker who arranges land finance regularly can say which lenders suit a particular site and borrower. The land mortgage brokers page lists firms that arrange this kind of finance.