Financing land purchase - how did you do it? (Non business)

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samlf

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This is an idea I have been considering for a long time, and I believe I may now be in a position where it is at least feasible to move forward.

From my research it appears, unsurprisingly, that the majority of finance is available only for commercial use. So for those who have purchased land for personal use, how did you get finance for it? Recommendations of companies most welcome.

Ideally looking for a 90-100% finance arrangement. Looking to get the most land I can afford, probably 6-8 acres at ~10k per acre. This is beyond the maximum available on a personal loan, so that option is reserved for a smaller acreage as a last resort.
 
It was 27 years ago but I took out a personal loan from the bank. The bank manager said it was the first time he had approved a personal loan to buy land.
 
We already had a couple of acres, but wanted to buy 10 more next door. The bank would have loaned us 80k on an interest only basis. That might be only because it was next door though, I don't know, but it did not actually border our current land, there was a house between us and it on one side and 2 houses on the other. So, the land may not need to be attached.

I was happy with interest only, as we would have got it back when we sold the house as property with 12 acres is worth more than property with just a couple. Paying the interest would have meant we had use of the land.

We did not go ahead in the end, the land price went up, and TBH we have enough for what we need, a small arena and a commercial arena over the road. It would just have been for personal use.
 
samlf said:
This is an idea I have been considering for a long time, and I believe I may now be in a position where it is at least feasible to move forward.

From my research it appears, unsurprisingly, that the majority of finance is available only for commercial use. So for those who have purchased land for personal use, how did you get finance for it? Recommendations of companies most welcome.

Ideally looking for a 90-100% finance arrangement. Looking to get the most land I can afford, probably 6-8 acres at ~10k per acre. This is beyond the maximum available on a personal loan, so that option is reserved for a smaller acreage as a last resort.
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You wont get it unless you have anything else to secure against it and im not sure you will get anything on a personal loan without lying about the purpose.
At best you are likely to get 50% if you are using the land as security due to volatile values that are still dropping at least around here in prime farming land. We are farming and even with a lot of land behind us find it harder to get finance for more.
As you say agricultural land is a specialised finance market and no outside lenders tend to want know . Some have had success adding to existing home loans however only usually if the property more than covers the debt.
 
Spottyappy said:
The cheapest and easiest way woudl be to remortgage your house, assumign you own one and have enough equity in it.
The NFU used to lend for land, but I think they now only lend for agriculture but they maybe worth ringing and asking.
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NFU have never lent for land purchase agricultural or not are you getting mixed up with AMC the Agricultural mortgage corporation. who used to advertise in NFU literature.
 
When I was interested in buying my livery yard, it would have been possible but we would of had to remortgage the house and use that as collateral. We have no mortgage on the house so borrowing would have straight forward
 
I bought a house with 6 acres and therefore it was included in the mortgage. We also put forward a substantial deposit
 
Spottyappy said:
Their brokers have lent to my family.
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Not NFU though up to about 10 yrs ago they did have a scheme for machinery purchase and short term finance however they were merely middlemen for a large multinational trading in a different guise. They are not currently doing anything like that! NFU finance ltd stopped lending in 2007.
 
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Borrowed more on mortgage said it was for home improvements!! Although bank knew what was really for but 10 years ago they lent without question! Good luck!
 
We borrowed from the AMC. Had to have just shy of a 50% deposit though. No other lender would lend as it was agricultural land, although they would have lent 4 x as much with a fraction of the deposit if we had been buying a house! Was very frustrating and took a long time to sort. Worth it in the end though!
 
I remortgaged my house - luckily I had enough equity and my salary had increased enough. The BS started saying only if it was within 100 yards so I said oh well, I'll speak to my bank, whereupon they did a quick rethink and agreed to lend the money. That was over 20 years ago, but bear in mind you are the customer and they want you to take up their products.
Otherwise Agricultural Mortgage Company (AMC) but I don't know if they lend for business purposes only.
 
I bought my land at the same time as the house. Adjacent, one purchase, but most of the land (barring a single field) was under separate titles. I asked for a mortgage against everything, but the mortgage company refused to lend against the land part. So, I had to buy those titles for cash and have a bigger mortgage on the house and first field. So, they ended up lending the same amount of money, at the same rate, but against less equity - clever people these mortgage companies.
 
meesha said:
Borrowed more on mortgage said it was for home improvements!! Although bank knew what was really for but 10 years ago they lent without question! Good luck!
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Me too. My currently swamp like two acres should have been a kitchen and bathroom! It wasn’t questioned and we increased the years it was over so that we didn’t pay more each month.
 
If you have a personal pension you may be able to buy via that - it will probably need a "self invested" (sipp) facility . I considered it a few years ago ( I work in the pension industry) so it can be done.
 
Basically your pension buys/owns the land not you. You might have to pay your pension rent for using the land. Pension has to be a self invested personal pension though.
 
popsdosh said:
Not NFU though up to about 10 yrs ago they did have a scheme for machinery purchase and short term finance however they were merely middlemen for a large multinational trading in a different guise. They are not currently doing anything like that! NFU finance ltd stopped lending in 2007.
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You’re like a flaming terrier, and don’t give up!!
If you read my original post properly, I stated to call the NFU and find out, as I am not up to date with any lending they may or may not do.
 
Agricultural land is a permitted investment via a pension (sipp) The pension owns the land but as you own the pension you still have control. You would pay rent but this would go into your pension so still remains for your benefit. If you later sold the land the proceeds would go into your pension but if you have made any profit there would be no Capital gains tax on assets held in a pension. If you had costs - say fencing then the cost would come out of the pension fund so can be very tax efficient.
It can work but is not for everyone. A good IFA would be able to advise you.
 
I just went to my bank which was Lloyds, telling the manager I wanted to buy some land for my horses and they agreed. There were no problems. They were satisfied I had the salary to support the loan, I had 10% deposit and they took the house deeds as security. (the house had no mortgage) I made sure that I could repay the loan as quickly as I wanted with no penalties for clearing it early.
 
We used the equity from the house MrGS sold to get the mortgage for the buildings and the first 13 acres .
We then increased the mortgage in stages as we did up the house .
For the further land we bought we where fortunate and where able to pay cash .
 
Thank you all for sharing your experiences and opinions.
I have looked into personal loans and some companies do say you can't use them to buy land, but lots of people have said the same as on this thread - that actually they're not too bothered provided you are making the repayments.
AMC unfortunately only lend for commercial use. I don't really know what sort of pension I have, but it won't have enough value to buy land yet, as I have only been paying in for a few years.

My parents have very kindly offered the possibility of securing a loan against the equity in their house which will be more than sufficient for a maximum 80k loan. This is something I'd like to avoid if possible, for obvious reason.

I think I will try to talk to a financial advisor, it's just finding someone knowledgeable in this specific field and someone who is trustworthy .
 
samlf said:
Thank you all for sharing your experiences and opinions.
I have looked into personal loans and some companies do say you can't use them to buy land, but lots of people have said the same as on this thread - that actually they're not too bothered provided you are making the repayments.
AMC unfortunately only lend for commercial use. I don't really know what sort of pension I have, but it won't have enough value to buy land yet, as I have only been paying in for a few years.

My parents have very kindly offered the possibility of securing a loan against the equity in their house which will be more than sufficient for a maximum 80k loan. This is something I'd like to avoid if possible, for obvious reason.

I think I will try to talk to a financial advisor, it's just finding someone knowledgeable in this specific field and someone who is trustworthy .
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I am not aware of anybody on this thread who has purchased via personal loans all the ones that said that it was for improvements seem to be for extending mortgages. By far your cheapest way is to take up your parents offer or potentially talk to them about the pension route as it may have benefits for all of you! In some ways it may be easier for your parents to do the deal anyhow as they are putting up the equity particularly if you are thinking you may need a mortgage on a house in the medium term as your repayments on a mortgage would create a much larger hurdle to jump in the affordability stakes. These repayments if through your parents could disappear for a short while whilst discussing a mortgage on a property. . You need an adviser that will look after your interest and im afraid independent advice of this type will add to your cost. Your parents potentially could get an AMC loan if they were to be letting the land back to a tenant ;-) ?
 
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We have just done it by remortging the house. It was a blumming faff. Coouldnt go to banks as land is over 3 acrea. There were so many hoops to jump through. The remortgage was about 15% of the houses value. It all essentially boils down to affordabiloty.

OP do ypu have a house? Also we had to go to a building society, not a bank as it was for land.
 
Last year I went and spoke to our mortgage provider. I explained I wanted to buy last that was not attached to the house and after they scratched their heads a, little, they confirmed they would be able to add it on to my mortgage (basically getting equity out of my house)
Just out of interest, where is land 10k an acre? Round here it's now 20k plus an acre.
 
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