Mortgage advice for buying a smallholding or farm
Considering buying a smallholding or farm? Whether you’re already searching, or about to start looking for your West Country Dream, you’ll need to be fully clued up on the type of mortgages available to you.
We take a look at some key points to bear in mind when seeking your perfect West Country property.
Is there an agricultural tie?
If you’re looking for a farm or smallholding, be aware that it may have an agricultural tie, which can limit the number of lenders available to you.
Agricultural ties, also referred to as Agricultural Restrictions, are sometimes applied to agricultural properties that have been built on a farm/smallholding where development would not usually be allowed.
This means it will have conditions that have to be met in order to live or buy that property. The most common rule is that the house ‘must be occupied by someone who is, or was previously employed, in the locality in agriculture’.
As a result, there tend to be fewer lenders who are willing to mortgage properties that have agricultural ties.
However, properties with ties tend to be much cheaper than those without, so if you don’t have a connection to agriculture you can apply to remove it or rent it out to someone who does!
Farm / commercial mortgage
Many mainstream mortgage lenders will often ask how much land is with the property. If it’s over a certain amount of acreage, you may need to find a specialist mortgage advisor.
A smallholding is usually defined as between two and 20 acres, with anything over this size classed as a farm. If you’re looking for a smallholding with minimal acreage for hobby farming, you could still be entitled to a commercial mortgage.
Using a lender that specialises in agriculture can be advantageous because they will have more knowledge of the industry. Make sure you shop around and talk to a variety of lenders to find a mortgage most suited to you.
Have a business plan
Planning to start up your own farm? Whether you want to keep a flock of sheep or a dairy herd, ensure you have a thorough business plan.
A business plan not only helps you to have a clear picture of what you want to achieve from your farm and how you will attain it, it is also essential to securing a mortgage.
Lenders often require evidence as reassurance you will be able to make the mortgage payments so what better way of showing them than by having a detailed business plan!
Do your research
Whether you’re buying a smallholding to keep a handful of sheep or starting up a dairy farm, do your research to find the most suitable mortgage lender.
The extra time invested initially could save you thousands later down the line.
Searching for a smallholding or farm?
We can help find your perfect property in the West Country, simply give us a call via our contact page or take a look at our land and property services.