Farm and Agricultural Mortgages

Looking to secure a farm or agricultural mortgage? Find out how a specialist mortgage broker can help you

Firstly, what type of land or property do you need the mortgage for?

Home Commercial Mortgages Farm And Agricultural Mortgages
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Jon Nixon

Reviewer: Jon Nixon

Director of Distribution

Updated: April 8, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

April 8, 2024

Agricultural mortgages (sometimes called farm mortgages) are a specific type of loan used to buy or refinance agricultural land and/or associated buildings.

In this article we’ll explain the variety of purposes for agricultural mortgages, the eligibility criteria and why your best route to a successful application is to speak to an expert agricultural mortgage broker.

What are agricultural mortgages and how do they  work?

Agricultural mortgages work in much the same way as regular commercial mortgages in that they can be used to finance a purchase or release equity. However, they are restricted to certain types of land or buildings:

  • Working farms
  • Farm homes
  • Farms run as a ‘lifestyle business’
  • Other rural businesses
  • Land or property used for equine businesses (ie stables, livery yards)
  • Renewable energy sites
  • Country estates

Fixed and variable rates are available. Which is best for you will be determined by your individual circumstances.

It’s not uncommon for farmland to come with an agricultural tie. This is a type of covenant that often includes restrictions on what activities can take place on the land or occupancy stipulations (eg applicant must be employed in an agriculture related job).

It’s important you check for any ties and inform your lender from the outset to avoid complications further down the line.

Maximise your chance of approval with a specialist in farming and agricultural mortgages

Get Started

Ask Us A Question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

Feefo 5 Stars
1 of 3
2 of 3
3 of 3 Send!

How much your mortgage will cost

Agricultural Mortgage Calculator

This calculator can tell you the monthly and overall cost of your mortgage, based on the loan amount, interest rate, and term length.

Enter the amount you're borrowing
Between 3.5% and 6% is average for a farm mortgage but the rate you get may vary
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms

Your Results:

The monthly repayments on a mortgage would be

The total amount paid at the end of your mortgage term would be

Get started with an expert broker to find out how much they could help you save on your mortgage repayments.

Get Started

Eligibility criteria

As with all types of commercial mortgage, lenders consider several factors when deciding whether to approve an application.

These include:

  • Industry experience: An established farmer looking to invest in an already successful business through diversification, can expect to have plenty of borrowing options and access to the best rates. With that said, there are products specifically aimed at rural start-ups but rates are typically higher.
  • Business finances: Lots of lenders will want to see the last three years of accounts when assessing affordability. If these are healthy and your projections are positive, once again you are more likely to be approved and to get the best rates. If you have been trading for less than three years or are seeking funds to consolidate other debts and get business back on track, there may still be borrowing options but you are advised to seek specialist advice.
  • Credit file: While affordability for the loan will be based on the business earnings before interest, tax, depreciation and amortisation (EBITDA), some lenders will want to view your personal credit file as part of the application process.
  • Size of loan: Most providers have a minimum loan amount of £25,000. Upper limits will vary amongst different lenders
  • Type of property: The property offered as security can make a difference, not just the property you are buying. Non-standard constructions, whilst quite common on agricultural land, are considered more risky, and this will often be reflected in a higher rate of interest.

Deposit requirements

Most lenders offer a maximum loan to value (LTV) of 70%. This means you will need to have a deposit of 30% or more to get approved. However, this does not need to be a cash deposit. If you are refinancing, you can use equity in the property or in other assets you own. For purchases, you might use cash, assets or a combination of the two. A larger deposit will lessen the risk for lenders and may result in a lower rate.

There are lenders who will loan up to 100% if you have sufficient assets or other collateral to put up as security.

What interest rate to expect

Rates for this type of lending tend to be around 2% above the Bank of England base rate. However, the rate you are offered will be largely determined by your ability to sell your proposal to the mortgage provider.

Rates for commercial mortgages are typically higher than those for residential properties. But commercial mortgages are assessed in a very different way.

While each lender has their own attitude to risk, commercial mortgages are often more of a negotiation than a straightforward application process. Essentially, lenders (particularly specialist lenders) understand the risks but are willing to be convinced that your agricultural business will be a success.

How to get an agricultural mortgage

Getting approved for an agricultural mortgage, and making sure you don’t pay over the odds, requires planning and preparation.

Follow these steps to get your maximum mortgage at the minimum rate possible:

  1. Do the maths: Work out how much you need to borrow (including all associated costs) and where you are going to source your deposit. This could be from working capital, outside investment, assets or other options available to you. You will also need to consider the tax implications of the way you structure your loan.
  2. Write a comprehensive business plan: This is the document you will use to convince lenders that lending to you is a safe risk. Your figures should be realistic, and you will need to ensure the plan addresses any potential challenges or questions, as providers will look at every detail.
  3. Speak to an agricultural mortgage broker: This is a niche market and comparing deals is not as easy as it might be with other areas of lending. A specialist broker will be able to find the right lender according to your circumstances, and judge whether any offer you receive is competitive.

Make an enquiry to get started with a broker who specialises in agricultural mortgages today.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

Which lenders offer farm mortgages?

There are both high street lenders and specialist providers who will lend money for agricultural or rural purposes.

High street names include:

  • Halifax
  • Natwest (maximum LTV of 50%)
  • Barclays (depending on the wording of any agricultural ties)

There are also lots of niche lenders, some of whom specialise in this type of loan and have a deep knowledge of the lending environment. In some circumstances, these providers are more open to negotiation.

Alternative finance options

If you can’t or don’t want to take out an agricultural mortgage, other options are available.

If you are buying agricultural property or buildings to sell, you could consider commercial bridging finance.

For renovation, redevelopment or diversification, commercial loans are another avenue worth exploring, depending on how much capital you actually need.

Finally, if you have enough equity in your home, you could potentially release this capital via a remortgage to help fund your agricultural purchase.

Get matched with an agricultural mortgage broker

Agricultural mortgage applications can live or die by your ability to negotiate. As with any form of negotiation, going into it armed with knowledge is the only way to get the best deal.

Unfortunately, in such a niche area of lending, it’s rare that borrowers have a comprehensive understanding of all facets of the lending process. A whole-of-market broker with agricultural industry experience and a network of contacts will find the right deal, and can intervene to help you get it over the line if necessary.

Our unique broker-matching service will assess your circumstances and pair you up with a broker who has experience in securing the best deal for people in your situation.

To get matched with your ideal agricultural broker, call today on 0808 189 2301 or enquire online.

Buying a farm can be quite a complex purchase which requires specialist advice to guide you through the process. If you’d like to know more about how to get a mortgage loan on a farm or associated agricultural land then get in touch with us.

  • Check mark The advisors we work with can offer the expert agricultural knowledge and advice you need.
  • Check mark Tailored to your own circumstances.

Frequently asked questions

Yes. Agricultural mortgages are available in England, Scotland, Wales and Northern Ireland. However postcode restrictions apply in Scotland and Northern Ireland.

Yes. There are several grants available to agricultural start-ups and established businesses. Check the website for details.

It usually takes between eight and twelve weeks to complete. Straightforward deals may complete quicker and complex transactions can take longer.

Yes, under specific circumstances this can be possible. If you want to build a property on the land to live in it, some lenders will allow this provided there is no commercial element to the land. However, if the land will be used for farming, a commercial land mortgage may be required.

Ask a question

We can help!

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in farm and agricultural land mortgages.

Ask us a question and we'll get the best expert to help.

Our Brokers

Get in touch today

Make an enquiry and we'll arrange for an experienced mortgage broker we work with to contact you straight away.

1 of 3
2 of 3
3 of 3 Send!

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

Maximise your chances of approval, whatever your situation. Find your perfect mortgage broker