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Agricultural Mortages

Agricultural properties have certain laws and restrictions when it comes to buying and selling. Understanding these laws and restrictions will help business owners to obtain an agricultural mortgage at the best rate. Since agricultural mortgages are a different type of mortgage that could be difficult to obtain, agricultural mortgages are mostly offered by specialist lenders. However, some high street banks offer them as well.


Agricultural Mortgage Options

            Since the agricultural business is seasonal and sometimes unpredictable, it may be difficult for property owners to keep generating a steady income. However, many of these agricultural properties are worth millions. For this reason, agricultural mortgage lenders provide a variety of repayment options to agricultural business owners. Agricultural mortgage may allow:

  • Fixed or variable rate
  • Repayment or interest only payments
  • Flexible loan terms (between 5 and 40 years)
  • Transfers through family generations
  • Availability to individuals, companies, and trusts
  • Repayments annually, biannually, quarterly, or monthly
  • Under and overpayments


With all of these different options, lenders try to accommodate for the specific needs of the way the applicant’s agricultural business is run. Lenders usually offer a loan of up to 75% of the value of the property. Depending on the situation, a loan of 100% of the value of the property with a higher interest rate may be obtained.


Eligible Properties

            In order to know whether a property is eligible for an agricultural mortgage, one must first understand what is considered an agricultural mortgage. Agricultural mortgages are financing of a variety of freehold or leasehold properties for to purchase or develop land or buildings used in the agricultural business.
Eligible properties include but are not limited to:

  • Pasture
  • Arable land
  • Woodlands and forests
  • Smallholdings
  • Farms
  • Vineyards
  • Orchards
  • Nurseries
  • Market gardens
  • Nature preserves
  • Catteries
  • Boarding and breeding kennels
  • Rare breed centers
  • Equestrian properties
  • Land or buildings under agricultural occupancy restriction


Agricultural Occupancy Restrictions

            Under agricultural occupancy restrictions, properties are subject to a law which states that owners must be employed in the agricultural business. Occupants may be employed in agriculture or have retired from agriculture within a 30 mile radius, or be using their land for agricultural purposes as a main source of income.

            Since agricultural employment is decreasing, selling a property that is subject to agricultural occupancy restrictions has become a very difficult task. With few purchasers meeting the criteria, it is necessary to apply for an agricultural mortgage because most financial institutions will not give out mortgages for properties under these restrictions.

            Should owners feel compelled, they may apply to their local planning authority to lift the agricultural occupancy restriction from their property or have it modified in some way to make the eligibility criteria more suitable for interested purchasers. These lifts or modifications can be difficult to obtain due to the increasing concerns of environmental issues of the growing urban sprawl. Most local planning authorities will want to keep as much open land for the purpose of keeping the area more environmentally green.



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