Agricultural Mortgages

How much can I borrow?

What is your minimum and maximum loan size?

We offer agricultural mortgages from £25,000 with no maximum loan size, often lending millions of pounds in a single transaction.

What is your maximum loan to value (LTV)?

The maximum loan to value (LTV) available on agricultural mortgages is 70%.

Some lenders may lend against both the value of the security, and the going concern value of the farming business that operates it.

For borrowers who can offer additional security over other property, we may be able to lend up to 100% of the value of the farm, as long as the overall LTV is 70% or below, and affordability rules can be met.

The amount borrowed will be subject to normal underwriting checks and must be affordable and the repayments sustainable. Lenders will make an assessment based on the strength of your business and your income and expenditure to determine your maximum loan.

Other factors will be things such as your experience in the sector, your credit history and the type of property offered as security.

How much deposit do I need to buy agricultural land?

As the maximum LTV is 70%, you will need at least 30% deposit to buy a farm or other agricultural property.

Agricultural mortgage rates and fees

What rate will I pay?

Agricultural mortgage rates are priced individually, but generally start from 5.5%, with most loans coming in at 6-7.5% per annum.

The lowest rates are reserved for the lowest risk applications, usually those for borrowers with a good credit history, low loan to value and strong affordability.

Your rate will also be influenced by whether you’re looking to borrow on a fixed rate or variable rate basis. Fixed rates are available from 2-10 years – or even longer in some cases.

How do I get the best agricultural mortgage rates?

At ABC Finance, always offer you the best commercial mortgage interest rates available to your individual situation.

If you have a large deposit for the purchase, or available equity left in the property if remortgaging, this will be a positive point. A strong background in the sector, along with a solid business will also be a plus point. If you have a smaller deposit or lack of experience in the sector, lender may charge a higher interest rate.

Applying for an agricultural mortgage

How long do agricultural mortgages take to complete?

The application process for agricultural mortgages takes around 8-12 weeks to complete on average.

Some applications can be completed quicker than this depending on the complexity of the application and how quickly your solicitor can handle the legal process.

If funds are needed quicker than this, consider a bridging loan as a short-term finance product to fund you while waiting for a commercial mortgage.

What documents will the lender require?

When applying for agricultural mortgages, the lender will usually require the following information:

• Your latest 2 or 3 years’ trading accounts
• Your last 6 months business & personal bank statements
• An overview of what your business does and your experience in the sector

Affordability & your income

The lender will assess affordability using your trading accounts, however they will work from the EBITDA (earnings before interest, tax, depreciation and amortisation), rather than the net profit. EBITDA removes certain costs from the accounts to give a truer picture of profitability for lending purposes.

Your latest two to three years trading accounts are usually assessed for agricultural mortgages. Some lenders will not only look at these but may use projected income too. If, for example, you are buying a larger site to allow you to expand, projected income for the new site will also come into affordability.

Your personal income will also be assessed but most likely won’t be used for mortgage purposes. Generally, lenders require the business to support the loan.