Construction business loans — can I use property or other assets as collateral?
Short answer: Yes — many lenders and brokers will advance secured construction finance using property, development land or business assets as collateral. Terms, loan‑to‑value (LTV), documentation and pricing depend on the asset type and project risk. Get a free eligibility check now to see which lenders match your needs: Get Quote Now — Free Eligibility Check
Introduction — quick answer
Short answer: Yes — many lenders will provide secured construction finance secured against property, development land or business assets. This is common for development finance, bridging, plant & machinery lending and commercial mortgages used to fund construction or contract delivery.
Why it matters: using security can unlock larger facilities and better pricing than unsecured borrowing, but it also brings legal charges, covenants and the risk of repossession if you default. You should understand terms before committing.
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Quick answer: who can use collateral & when it’s common
Collateral‑backed construction finance is typically used by limited companies and corporate builders for sums from around £10,000 upwards. Common use cases include:
- Development finance for residential or mixed‑use projects.
- Bridging loans to buy land or property for redevelopment.
- Plant & machinery finance to buy heavy equipment (hire purchase or chattel mortgages).
- Contract funding to bridge cashflow while on site.
- Refinance of existing secured debt to release equity for new projects.
Typical conditions that affect availability: loan size, developer/contractor track record, credit profile, planning status and whether the security is freehold, leasehold or chattel.
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What is a secured construction loan?
A secured construction loan is any facility where the lender takes a legal charge over an asset to reduce their risk. In construction this typically funds building works, land purchases, plant or contract delivery.
Common security types:
Our Business Finance Matching Process
Step 1
Complete Your Details
It takes just 1 minute on average to complete your business and contact details.
Step 2
We Match Your Business
With the best business finance broker or lender most suitable for your needs.
Step 3
You Get Free Quote + Advice
You receive a free quote along with complimentary expert financial advice.
It’s fast and free to get a quote from one of the UK’s leading finance brokers / lenders who will contact you directly with your quote/s.
- Residential or commercial property (existing investment or under development).
- Development land — with or without planning permission.
- Plant, machinery and vehicles (registered as chattels).
- Receivables, contract retentions or materials (via invoice/retention finance).
- Company charges or director guarantees (as additional security).
Charges can be a first charge (priority) or second charge (subordinate). Lenders may also request personal guarantees from directors — understand the implications for personal assets.
Types of collateral lenders accept for construction loans
Property (completed or investment)
Completed residential or commercial assets are common security. Typical LTV: broadly 60–75% of market value for established properties; development properties may be considered against either current value or Gross Development Value (GDV).
Development land (with and without planning)
Land with planning permission attracts better terms and higher LTV. Land without permission is higher risk — expect lower LTVs and higher rates, and lenders will stress‑test viability.
Plant & machinery
Contractor plant, M&E and specialist machinery can be financed by chattel mortgage, conditional sale or asset refinance. Valuations will be specialist and facilities may include fixed repayments or staged releases.
Materials, invoices & retentions
Invoice finance, retentions finance and stock financing let you use contract receivables or materials as security to free up working capital — usually lower fees than unsecured alternatives.
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Directors’ guarantees and personal property
Directors’ guarantees may be requested alongside business security. Offering personal property (including residential) can improve terms but increases personal risk.
Note: LTV ranges above are illustrative. Individual lender appetite varies — get matched to specialists via our free enquiry to compare offers.
How lenders value collateral
Lenders rely on independent valuations and surveys. Key methods include:
- Market value appraisal for completed property (often a RICS survey).
- Gross Development Value (GDV) for projects — based on expected completed value.
- Specialist plant valuations for machinery and vehicles.
- Stress testing of costs and time to allow for overruns and market shifts.
Planning status, environmental issues and existing charges on title materially affect valuation and terms. Expect lenders to factor contingency buffers into loan sizing.
Typical lender requirements & underwriting checks
Lenders will assess both the security and the borrower. Typical checks include:
- Title and Land Registry searches; existing charges review.
- Independent RICS or specialist valuations.
- Business accounts, management accounts and cashflow forecasts.
- Director credit checks and CVs demonstrating construction/development experience.
- Project plans, build contracts, contractor references and timescales.
- Legal documentation to register charges at Companies House or Land Registry.
Prepare: 12–24 months of accounts (if available), project budgets, contractor agreements and proof of title.
Costs, timescales and common caveats
Costs to budget for:
- Valuation and survey fees.
- Legal fees for charge registration.
- Arrangement and monitoring fees.
- Interest (secured loans often cheaper than unsecured), plus potential early repayment charges.
Typical timescales:
- Bridging loans: days to a few weeks.
- Development finance: often 2–6+ weeks depending on complexity.
- Asset finance: usually a few days to a couple of weeks.
Common caveats: staged drawdowns, restrictive covenants, requirement for professional project managers or monitoring surveyors, and potential personal guarantees. Always read legal terms and get independent advice where necessary.
Pros and cons
Pros
- Access to larger loan amounts and longer terms.
- Potentially lower interest rates than unsecured options.
- Possible approval for businesses with weaker cashflow when secured.
- Flexible product mix — bridging, development, asset finance.
Cons
- Risk of repossession if repayments are not met.
- Legal charges and restrictive covenants can limit future actions.
- Potential personal guarantees affecting personal property.
- Longer underwriting and higher up‑front costs in some cases.
Our Business Finance Matching Process
Step 1
Complete Your Details
It takes just 1 minute on average to complete your business and contact details.
Step 2
We Match Your Business
With the best business finance broker or lender most suitable for your needs.
Step 3
You Get Free Quote + Advice
You receive a free quote along with complimentary expert financial advice.
It’s fast and free to get a quote from one of the UK’s leading finance brokers / lenders who will contact you directly with your quote/s.
Find lenders who accept your collateral — Free Eligibility Check
Alternatives to secured loans
- Asset finance (hire purchase or lease) — funds equipment without charging property.
- Invoice finance or retentions finance — unlock working capital tied to invoices or contract retentions.
- Mezzanine finance or equity partnerships — for larger developments where dilution is acceptable.
- Unsecured business loans — smaller amounts but without asset risk (limited sums).
How to prepare if you want to use property or assets as collateral
Step-by-step checklist to improve your chances:
- Obtain up‑to‑date independent valuations (RICS for property; specialist for plant).
- Ensure title is clear and resolve any existing charges.
- Prepare realistic project costs, cashflow forecasts and contingency plans.
- Gather contractor CVs, references and signed contracts.
- Consolidate or reduce additional charges where possible.
- Consider structuring drawdowns by project stage to reduce lender monitoring friction.
How UK Business Loans can help
We do not lend money. Instead we connect construction businesses with lenders and brokers who can provide secured finance for projects and assets. Complete a short, no‑obligation enquiry (it’s not an application) and we’ll match you to partners suited to your sector and security type.
Our service is free for businesses and typically returns matched responses quickly. Your enquiry will not affect your credit score. Start a Free Eligibility Check
Learn more about specialist options for builders and developers on our construction sector page: construction business loans.
Frequently asked questions
Can I use my home as security for a construction loan?
Yes — some lenders accept residential property as security, but it increases personal risk and usually triggers stricter underwriting. Always get legal advice before offering personal residences.
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What LTV can I expect on development land?
Land with planning permission often attracts higher LTV (subject to lender), whereas land without permission typically gets lower LTVs and higher margins. Exact figures depend on project viability and lender risk appetite.
Will offering collateral reduce my interest rate?
Often it will — secured facilities usually permit lower rates or higher amounts than unsecured alternatives. But rate depends on lender, asset quality and your business profile.
What happens if the project overruns?
Lenders expect contingency in budgets. If overruns occur you may need additional funding, inject equity, or negotiate revised terms. Open communication with your lender early is essential.
Do I need planning permission to get development finance?
Not always, but planning status significantly affects valuation and terms. Lenders prefer schemes with planning or proven chances of consent.
Will applying through UK Business Loans affect my credit score?
No — submitting our short enquiry does not affect your credit score. Lenders may perform checks later if you proceed with an application.
Next steps — get a free quote
Ready to compare offers? Complete our short, no‑obligation enquiry (takes under 2 minutes) and we’ll match you with lenders and brokers who specialise in construction finance. We’ll pass your details to suitable partners who can provide quotes and next steps.
UK Business Loans is an introducer and is not a lender and does not provide regulated financial advice. We will share your details with selected lenders and brokers who may contact you. Using our service is free and will not affect your credit score. All finance is subject to status and lender terms. Read our Privacy Policy and Terms.
1. Can I use property or development land as collateral for construction business loans? — Yes — many lenders accept completed property or development land (with or without planning) as security for construction finance, though terms, LTV and documentation vary by lender and project risk.
2. What loan-to-value (LTV) can I expect on development land or property? — LTVs vary by asset and lender but are typically higher for completed investment property (roughly 60–75%) and lower for development land—especially land without planning—subject to project viability.
3. Will offering collateral reduce my interest rate on a construction loan? — Often yes: secured facilities usually allow lower rates or larger amounts than unsecured borrowing, but final pricing depends on the asset quality, business profile and lender appetite.
4. Do I need planning permission to get development finance or better terms? — Not always, but land with planning permission is valued higher and generally attracts better LTVs and margins than land without permission.
5. How long does it take to get a secured construction loan or bridging finance? — Timescales range from days for simple bridging or asset finance to 2–6+ weeks (or longer) for development finance depending on valuations, legal searches and underwriting complexity.
6. What documentation and checks will lenders carry out for secured construction loans? — Expect title and Land Registry searches, independent RICS or specialist valuations, business accounts and cashflow forecasts, director credit checks, project plans, contractor contracts and legal charge registration.
7. Can I use plant, machinery or vehicles as security for construction financing? — Yes — specialist asset finance (chattel mortgages, hire purchase or refinance) lets you use plant, machinery and vehicle fleets as collateral with tailored valuations and terms.
8. What happens if a construction project overruns or I default on a secured loan? — Lenders build contingency buffers into loans, but if overruns occur you may need extra funding or equity and, in default, secured assets can be repossessed, so understand covenants and seek advice early.
9. What are alternatives to secured loans for construction businesses? — Alternatives include asset finance, invoice or retentions finance, mezzanine or equity partnerships and unsecured business loans, depending on the amount required and your risk appetite.
10. How does UK Business Loans’ enquiry process work and will it affect my credit score? — Our short, free eligibility enquiry is not an application and won’t affect your credit score; we simply match you with FCA‑regulated lenders and brokers who can contact you with suitable options.