Agricultural Mortgages

At Access Commercial Ltd we have a dedicated agricultural finance department which deals specifically with agricultural mortgages. Understanding the agricultural laws and restrictions plays a key part in deciding the type of mortgage lender best suited to your needs. We can provide help and advice and offer you a financial solution at the best rates available.

What is an Agricultural Mortgage?

An agricultural mortgage is a mortgage that facilitates the purchase or development of agricultural land or buildings. Agricultural mortgages are marketed by specialist brokers and by some of the high street banks.

Most agricultural mortgage providers offer finance on a variety of freehold and leasehold rural properties, not just on traditional farms. Properties eligible for agricultural mortgages can include:

• Arable land
• Pasture
• Woodland (deciduous and coniferous)
• Farms
• Smallholdings
• Equestrian properties (including livery yards and racing stables)
• Boarding and breeding kennels
• Catteries
• Rare breeds centres
• Nature reserves
• Market gardens
• Nurseries and garden centres
• Orchards
• Vineyards
• Properties subject to agricultural occupancy restrictions

Why Choose an Agricultural Mortgage? 

By their very nature, income streams generated from rural businesses are often seasonal and sometimes erratic in nature. A rural property may be worth millions on paper but may not always be able to generate a steady cash flow. Mainstream lenders prefer regular repayments from borrowers and are often reluctant to provide mortgage finance for agricultural properties.

Nevertheless, agricultural mortgage brokers offer a range of mortgage and re-mortgage options that differ from traditional home buyer mortgages. Agricultural mortgage features may include:

• More flexible loan terms (between 5 and 40 years)
• Loan transferable from generation to generation
• Repayment or interest only
• Fixed or variable rate of interest
• Monthly, quarterly, biannual or annual repayment options
• Availability to individuals, companies and trusts

Many agricultural mortgages offer the option of making under and over payments, depending on the borrower’s varying financial situation. However, if underpayments are made, interest continues to accrue and will increase the outstanding balance owing on the mortgage.

Loans of up to 75 percent of the value of the property are normally available and 100 percent mortgages may be available to owner occupiers under certain circumstances, although for 100 percent mortgages, the interest rate charged is likely to be higher. On a 75 percent mortgage borrowers can expect to be making repayments at between 1.5 and 3 percent above the Bank of England base rate.

Summary

• Agricultural mortgages are available for a variety of rural properties, not just farms
• Agricultural mortgages are available to both owner occupiers and investors
• Agricultural mortgages offer more flexibility than conventional mortgages, but repayments are normally more expensive