It can be difficult enough to secure a mortgage on a traditional home, so if you have dreams of starting a new life out on the farm, you may be wondering: “Can I get a mortgage on a farm?”
Thankfully, the answer is yes! There are specialist agricultural mortgages which can be used to purchase agricultural land, although there are differences with normal mortgages that you should be aware of.
Can I take out a traditional mortgage?
While technically you could use a traditional mortgage to purchase a farm, you might find it difficult to do so.
Traditional lenders are wary of granting mortgages for farms for the simple reason that they’re unfamiliar with the market.
It’s also a risky proposition if the owner were to walk away or default on the payments, as it leaves the lender stuck with a property they don’t really know what to do with.
Instead probably your best option is to look for a farm mortgage (also known as an agricultural mortgage).
What can I use a farm mortgage for?
A farm mortgage is a commercial mortgage that can be used to finance a couple of things, including a full farm, a farm building, or some kind of farming enterprise, improvement or extension.
In fact, farm mortgages have become popular for farmers who are wishing to diversify their operations, as farming is coming under increased pressure from European legislation and unfair supermarket prices.
For more info on how farmers are feeling the pinch, check out this infographic from Shield Agriculture.
You could also use a farm mortgage to perhaps consolidate an existing loan or mortgage, or you could also use one to buy out a friend or relative who are perhaps retiring and giving up their farm.
It’s worth bearing in mind that to qualify for a farm mortgage the property you’re buying has to involve the production of agricultural products such as livestock or fruit/veg.
Where can I get one?
Some of the traditional high street lenders such as Barclay’s and NatWest offer agricultural mortgages, but you can also secure one through specialist lenders such as AMC and R&BS.
Much like with traditional mortgages, the rates and length of farm mortgages do vary from lender to lender, and are calculated on an individual basis, so it’s best to shop around, or get in touch with one of our advisors who will be happy to help try and find the one for you.
As with any other mortgage you’ll have to prove to the lender that you’ll be able to make your repayments, and provide a good credit history, and show that you always pay your bills on time, in some case you may also need to show that you have previous agricultural experience.