Land Mortgages
For established farms, estates and equestrian and rural businesses the barriers to mortgages for buying land are low – and we can help you overcome them.
But those who contact us wishing to purchase land for their own personal use or to set up their own new business enterprise, underestimate the complexities of financing it. It has its challenges and options are limited.
Many looking to buy a small acreage, think they can access a small deposit/high Loan-to-Value (LTV) mortgage option with repayments based on personal income, but, unfortunately, such options are non-existent for land purchases.
Of the options that might be available for the purchase, be prepared to have to provide a sizeable deposit and expect to pay higher interest rates and fees than you might expect.
We can help you if
- You are an established farm, equestrian or rural business purchasing more land;
- You will generate commercial income from the property;
- The location has buildings, facilities and planning permission to undertake your planned new enterprise immediately;
- You have a deposit of at least 30% of the purchase price;
- You need to borrow a minimum of £100,000.
If the above apply to you, please contact us and we’d be delighted to help you.
We recognise navigating these financing options can be overwhelming. Our expertise lies in understanding these parameters and guiding you towards the most suitable solution for your specific situation.
Factors to consider
Additional fees: as these cases aren’t straightforward, mortgage consultants like us charge a fee for finding you finance. For a small parcel for grazing or hobby-farming the time spent sourcing finance and hence our fees could be high and disproportionate to the borrowing you require.
A commercial focus: land is seen as a commercial asset by lenders. You must present a commercial lending case to access a mortgage from a high-street lender.
Unfortunately, a small parcel for grazing or hobby-farming will not generate sufficient income to qualify for a mainstream commercial lender.
Loan-to-Value (LTV) ratio: for land without a house or buildings, lenders typically require a higher deposit compared to land with a house or buildings. Expect a minimum deposit of 40% to 50% (compared to 15-20% for residential properties with land or 30% for a commercial mortgage).
Income and serviceability: unlike residential mortgages that consider your personal income, commercial mortgages focus on the income that will be generated, and a few acres normally won’t generate the income required.
Challenges for new ventures: accessing a mortgage for land alone can be difficult, especially for new businesses. Lenders are hesitant if affordability is based on forecast and unlikely to support those proposals that are dependent on planning permission.
Other costs: it’s not just the purchase price to consider. Other costs need to be considered including set up fees, legal fees, valuation fees etc which in most cases cannot usually be added to your mortgage.
Understanding your options
Mainstream lenders are unlikely to be able to assist you. Other options include:
Alternative lenders:
Via specific lenders at 50% LTV requiring 50% deposit
Via other lenders at 60% LTV (minimum £100,000) requiring 40% deposit
These lenders offer higher interest rates (at around 10%-12%) and fees than traditional residential or commercial mortgage lenders.
Second charge mortgages: in some cases, a second charge mortgage secured against your existing house can bridge the funding gap.
A combination approach: you could explore a creative combination of the above options to reach your desired funding level.
Securing finance for bare land is highly complex and typically requires a substantial deposit alongside a strong commercial business case.
Discuss your land acquisition, deposit options, and project viability with our expert team.
Call or email us to start your enquiry.
Recent successes
“If you go direct to a bank, you don’t know if you are getting the best deal. Using a mortgage adviser you get more insight, access to knowledge of the whole market and get the best results.”
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Arable farm purchase
When the Chennells family needed to finance a neighbouring farm purchase within a month, R&BS approached five lenders, received four offers, and negotiated a more competitive deal than their existing bank had originally offered.
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Purchase of a country manor house with land and stables
When Jackie Taylor sought to purchase a manor house with stables and land, her usual lenders had no appetite for the property type or livery business. R&BS secured mortgage approval within two days, and kept the case on track through two years of complications.
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Refinancing an estate after lender reclassified its borrowing
A 400-acre estate faced sharply increased borrowing costs after its lender reclassified part of its debt. R&BS consolidated £3.8 million of facilities into a single structure with a private bank, securing lower rates and preserving future borrowing flexibility.
Three things set R&BS apart
Relationships with 30+ specialist banks and lenders means we find mortgages on great terms where others fail.
Understanding both field and finance means you won’t have to explain your business to us.
Independent – not being tied to a single bank or lender means clients are our sole priority.
