Mortgages For Properties With Land

Property with acreage can often need a broker with a degree of specialism to step in and help arrange finance.  At Fox Davidson, we are experienced in financing property with a couple of acres right up to functioning farms with hundreds of acres.

In lending terms, property with acreage falls into three main sectors.  Each of which is underwritten differently and each of which we may need to approach in different ways with different types of lender.

Please note, Fox Davidson does not advise on properties with acreage in Scotland.


Up to 2 acres

A residential property can be bought via a high street lender if it has a couple of acres. This generally causes no issue as most lenders will view up to a couple of acres as being an extended garden and include it in their valuation.  If we add outbuildings into the picture, this can start to make things slightly more complex for the average high street lender as they will need to determine whether the property is going to be used commercially. 

At Fox Davidson, we can finance property with up to ten acres of land with high street lenders at market leading rates.  We have to be careful which lenders we approach as the majority may only take a couple of acres into consideration when valuing the property.  Therefore, if our client is borrowing at a higher loan to value or trying to obtain the lowest rate available at a low loan to value, the correct lender needs to be approached first time. As we are an across the market brokerage and specialise in finance for property with acreage, we know which lender to approach first time for any scenario.

 

Over 10 acres

The majority of high street lenders place a 10 acre maximum on property they will secure finance against. At Fox Davidson, we have built great relationships with some high street lenders who have no maximum acreage criteria.  This is based on the property being primarily a main residence and not being used commercially. Also these lenders may not value the whole acreage, so whilst it is technically possible to secure a high street rate on a property with over 10 acres, we must be aware of a possible down valuation if the acreage makes up a high percentage of the overall value of the property.

This is all part of our researching and fact finding, so our experts will advise you accordingly. Often, if the property has over 10 acres, we may be looking at quite specialised lenders, though they may still have competitive rates which can be comparable with the high street. The advantage of using a specialised lender is that they take the time to really understand the property and its use, so can often lend on very competitive terms if they feel comfortable with the scenario.

  • High street banks and building societies may lend if the property is relatively straightforward and they are comfortable that the property is being used as a main residence with no commercial use
  • Local building societies can often look at higher acreage than the high street and can also lend against property with an agricultural or equestrian tie
  • Private Banks are fine with large acreage and can also look at a mix of residential and commercial use. They tend to have a minimum loan of £300,000 and can provide a bespoke and individual service.
  • Specialist lenders can lend against property with acreage which may not be mortgageable via a more traditional route. This may include timber frame properties, timber clad properties and properties in need of refurbishment.  The lending via this route tends to be at a lower loan to value.

Types of use we often see alongside using the property as a main residence include:

  • Development of outbuildings on the land
  • Acquiring planning permission for residential development
  • Holiday lets
  • Air BNB
  • Livery
  • Equestrian centre
  • Renting land to local farmers
  • Hobby farming
  • Annex for family to live in
  • Cattery
  • Kennels
  • Rental property on the land
  • Staff accommodation

As every property is different and everyone has their own requirements for a property, financing each property will also be unique. Here at Fox Davidson, we have a simple way forward:

  1. Get in contact.  Have a quick ten minute chat with a Fox Davidson adviser. They should be able to give you some initial thoughts and ideas.
  2. Our adviser will come back to you within 24 hours with an outline of some initial terms and a way forward. At this stage, they will also let you know the likely paperwork required to move this forward with a lender.
  3. If you are happy with this, we can schedule a meeting or another phone call to go through your requirements in more detail. We will also collect the relevant information from you that we need in order to give you a more formal recommendation.
  4. We will provide you with a formal recommendation and, if you are happy with this, we will submit the application for underwriting and the valuation to be instructed.