Getting a mortgage on a large acreage property

Securing a mortgage on a large acreage property presents unique challenges and opportunities that differ significantly from purchasing a standard residential home. Whether you’re eyeing a sprawling rural estate, a mixed-use property, or a large plot of land that generates income, understanding the intricacies of such mortgages is crucial.

This comprehensive guide delves into the various aspects of acquiring mortgages for properties with extensive land. We explore options for mixed-use properties, the feasibility of getting mortgages on houses with substantial acreage, the role of private banks in financing these unique properties, and how income-generating large properties impact mortgage eligibility. With expert insights and practical advice, this guide aims to simplify the complexities of large acreage mortgages, helping you make informed decisions in your property investment journey.

Can you get a mortgage on a house with a large acreage?

Yes, you can get a mortgage on a house with large acreage in the UK. However, the availability of lenders and the terms offered can vary significantly based on the size of the property. Most mainstream lenders will consider properties with up to three acres. Many will evaluate properties with up to 10 acres on a case-by-case basis, but only a few lenders are willing to consider properties with over 10 acres.

What are the eligibility criteria to get a mortgage with a large acreage?

The eligibility criteria for getting a mortgage on a large acreage property in the UK typically include:

Property size limitations: Many lenders have size limits for the properties they will mortgage. While some may consider properties up to 10 acres, very few finance over 10 acres.

Single legal title: The land should be held under a single legal title.

No planning or occupancy restrictions: The land should not be encumbered with any planning requirements or occupancy restrictions.

Non-commercial use: If the land is intended for non-commercial purposes, a standard residential mortgage might be applicable. For commercial use, such as farming or holiday properties, an agricultural or commercial mortgage is required​​​​.

Meeting these criteria is essential for eligibility, and it’s advisable to consult with a mortgage broker to understand the specific requirements of lenders who offer mortgages on large acreage properties.

What to consider when finding mortgages for properties with land

When seeking mortgages for properties with land, consider the following:

Size and use of land: Lenders have varying policies based on the size of the land and its intended use (residential vs. commercial).

Eligibility criteria: Confirm if you meet the lender’s criteria such as land size limits and non-commercial use requirements.

Lender availability: Fewer lenders offer mortgages for large acreage, so research which ones cater to your needs.

Mortgage type: Determine if you need a standard residential, commercial, semi-commercial, or agricultural mortgage based on the land’s use.

Professional advice: Consult a mortgage broker or advisor, especially for larger or more complex properties, to navigate the application process and find suitable lenders.
Each of these factors plays a crucial role in securing the right mortgage for a property with land.

How much deposit do you need for a property with a large acreage?

The deposit required for a mortgage on a property with large acreage in the UK depends on whether the property is residential or commercial:

Residential properties with large acreage:

• For residential properties with extensive grounds, the maximum loan-to-value (LTV) ratio is typically between 90% to 95%. This means you would need a deposit of at least 5% to 10% of the property’s purchase price​​.
• Another source mentions that for residential houses with land, the LTV will be at most 80-85%, requiring a deposit of at least 15-20%​​.

Commercial properties with large acreage:

• For commercial properties with land, the maximum LTV is usually around 70%, meaning a deposit of at least 30% of the purchase price is needed​​.
• This is consistent with information indicating that for land mortgages in general, a deposit of around 30% is often required, which is significantly higher than the potential 5% deposit for a standard residential mortgage​​.

It’s important to note that securing a mortgage for large acreage, especially for land, is often viewed as high-risk by lenders. This is due to the perception of the land mortgage market as slow-moving, which increases the risk for lenders. Therefore, the deposit requirements tend to be higher compared to standard residential mortgages.

What type of mortgage will you need?

The type of mortgage you need for a property with large acreage depends on how you plan to use the land:

Standard residential mortgage: If the land is intended for non-commercial purposes, you might qualify for a standard residential mortgage. Requirements usually include the land being held under a single legal title, no occupancy restrictions or planning requirements, and the land not being used for business activity.

Agricultural mortgage: For commercial farming purposes, an agricultural mortgage is necessary.

Commercial or semi-commercial mortgage: If the land is used for other commercial purposes, such as a holiday property, campsite, or a B&B, you’ll need a commercial or semi-commercial mortgage.

Lenders offering mortgages with land without acreage restrictions

In the UK, there are several lenders who are known to offer mortgages for properties with land, without specific acreage restrictions. These include:

Nationwide for intermediaries: They consider applications for larger homes with land, provided the property is used entirely for the applicant’s residential purposes. They do not lend if the house or land is used for business or commercial agriculture.

One of the largest banks: Offers mortgages over £250,000 with no acreage limit, given that a 25% deposit is available. The acreage limit is reduced to 15 acres for those with a smaller deposit. A full structural survey of the property is required.

Skipton building society: They state that they do not have a maximum acreage as long as the property is used for residential purposes with no income derived from the land.

Atom mortgages: Will potentially lend on properties with over 10 acres. Applicants must provide full details of the living accommodation, total area of land, current and intended use of the land, details of any outbuildings, and any restrictions.

Bluestone mortgages: Known to lend on properties with up to 40 acres.

Marsden mortgages: Offers lending on properties with up to 15 acres for non-commercial use only.

Saffron mortgages: Will potentially lend on properties with up to 20 acres, provided they are non-commercial. They also consider applications for hobby farms.

Staffordshire railway building society: Potentially lends on properties with over 10 acres but requires an understanding of how clients will maintain the land.

Tipton mortgages: Has no limit on acreage for their mortgage offerings​​​​​​.

These lenders show a range of policies regarding properties with large acreage, reflecting the diversity of the UK mortgage market for such properties. It’s important for potential borrowers to provide detailed information about the property and its use to meet the specific requirements of each lender.

What are the average allowance limits for mortgages?

In the UK, the acreage limits for mortgages on properties with land can vary significantly among lenders. Most mainstream lenders are comfortable considering properties with up to three acres of land. Beyond this, the options become more limited, with some lenders willing to consider properties up to 10 acres, typically on a case-by-case basis. However, it’s rare to find lenders willing to finance properties over 10 acres.

For larger properties, specific lenders specialize in large acreage mortgages. These lenders, such as Bluestone Mortgages (up to 40 acres), Saffron Mortgages (up to 20 acres for non-commercial purposes), and Marsden Mortgages (up to 15 acres for non-commercial properties), have more flexibility. Some lenders, like Tipton Mortgages, offer mortgages on large acreage properties without a defined upper limit on property size.

It’s important to note that these limits are often subject to the intended use of the property and the lender’s individual risk assessment policies. Properties intended for commercial use or with certain restrictions may face different, often more stringent, acreage limitations.

Where can I find a mortgage for a home with a large acreage?

To find a mortgage for a home with large acreage in the UK, you have several options. Firstly, consult with mortgage brokers or advisors who specialize in rural or large-acreage properties. These professionals can guide you through the complexities of such mortgages and help you identify suitable lenders.

Mainstream banks and building societies may offer mortgages on properties with land, but they typically have acreage limits. For larger properties, specialized lenders like Bluestone Mortgages, Atom Mortgages, Saffron Mortgages, Marsden Mortgages, Tipton Mortgages, and Staffordshire Railway Building Society are known to consider larger acreage. These lenders may have specific criteria and may consider properties on a case-by-case basis.

Online resources and platforms that focus on rural properties and mortgages can also be useful in identifying potential lenders. Remember, each lender has its policies, and it’s crucial to understand their terms and conditions before proceeding.

How to get a mortgage on a smallholding with land

To get a mortgage on a smallholding with land in the UK, consider the following steps:

Understand smallholding finance: A smallholding is typically a residential site with more land than a garden area but not a commercial farm. The land may be used for various purposes like crop growing, livestock, and woodland. The financing of a smallholding can differ based on how the land is used, whether for personal benefit or commercial activities like calf rearing or dairy farming, which may require more specialised lenders​​.

Finance options: For smallholdings with outside income sources, it’s possible to secure finance of up to 95% against the property. Standard residential finance at market-leading rates is often available for these types of properties. Additionally, smallholdings with some element of commercial use, like holiday lets, Airbnb, catteries, or kennels, can also secure residential finance​​​​​​.

Application process: The process typically involves initial consultations with an adviser, getting an outline of terms and requirements, a more detailed discussion and paperwork collection, followed by a formal recommendation and the submission of the application for underwriting and valuation​​.

Mortgage terms: Typical mortgage terms for smallholdings and houses with land include terms up to 25 years, fixed interest rates for up to 25 years, interest-only periods for up to 2 years, bank base rate tracker variable interest rates, consideration of combined employment and business income, options for lump sum reductions with minimal early repayment penalties, and up to 70% loan to value (LTV). In some cases, 100% mortgages are considered if there’s further owned property​​.

It’s essential to get professional advice and support early in the planning stages. Mortgage consultants specialising in rural properties can help prepare lending proposals, negotiate terms with appropriate lenders, and guide you through every step of the process. The size of the acreage, location, and use of the smallholding are key factors that determine which lenders to approach and the type of finance suitable for your needs.

Remortgaging a property with a large acreage

Remortgaging a property with large acreage in the UK requires careful consideration of several factors. This process can be more complex than remortgaging a standard residential property due to the unique nature and use of large acreage lands. Whether you are looking to secure a better interest rate, release equity, or change the terms of your mortgage, understanding the specific requirements and challenges of remortgageing large acreage properties is crucial.

Firstly, assess the current use of the land. The primary consideration for lenders is whether the usage of the land has changed since the initial mortgage was secured. For properties initially mortgaged as residential but now used for commercial purposes (or vice versa), a change in the mortgage type might be necessary. This transition, from residential to commercial mortgage or the other way around, often involves more stringent requirements and a more detailed assessment process.

Another vital aspect is finding a lender that accommodates large acreage remortgages. While some mainstream lenders may offer remortgage services for properties with significant land, their acreage limits and terms can vary. You might need to explore options with specialized lenders who have more experience and flexibility with large properties. These lenders typically understand the nuances of large acreage properties, including valuation challenges and the potential for commercial use.

In terms of application, prepare for a more thorough evaluation process. Lenders will likely require detailed information about the property, including its size, location, current use, and any planning restrictions or commercial activities. This information helps the lender assess the risk associated with the property and determine the most suitable mortgage terms.

Finally, consider consulting a mortgage broker or advisor with experience in large acreage properties. They can provide invaluable assistance in navigating the complexities of remortgaging such properties. A broker can help identify the most suitable lenders, assist in preparing your application, and offer advice on how to structure the mortgage to best suit your current and future needs.

What legal aspects should I consider when buying a property with a large acreage?

When purchasing a property with a large acreage, several legal aspects need careful consideration to ensure a smooth and compliant transaction. Understanding these legalities is essential, as they can significantly impact your ownership and use of the property.

Title and boundary checks: It’s crucial to verify the title of the property to ensure there are no disputes or unclear boundaries. Large acreage properties often have complex boundary lines that can lead to legal disputes if not properly documented. A detailed survey of the property should be conducted to establish clear boundaries and identify any potential encroachments or easements that may affect your use of the land.

Planning permissions and land use restrictions: Be aware of any planning permissions attached to the property or land use restrictions. This is especially important if you intend to develop the land, change its use, or engage in certain types of farming or commercial activities. Local planning authorities may have specific regulations governing large acreage properties, and it’s vital to ensure compliance with these rules.

Environmental regulations: Large acreage properties may be subject to environmental protections or agricultural covenants. This can include restrictions on land development, obligations to maintain certain habitats or requirements for sustainable land management practices. Ensure that you understand any such legal obligations and how they might impact your plans for the property.

Access rights and rights of way: Check for any access rights or rights of way that may exist on the property. These can include public footpaths, bridleways, or rights for neighbouring properties to cross your land. Such rights can affect your privacy and how you use your land, so it’s important to be aware of them before making a purchase.

Financing and mortgage considerations: If you’re financing the purchase with a mortgage, be prepared for more stringent requirements from lenders for large acreage properties. This can include higher deposit requirements, more detailed valuation processes, and specific terms and conditions tailored to large rural properties.

Legal representation: Given the complexities involved, it’s advisable to engage a solicitor or legal expert who specialises in rural properties and land transactions. They can provide valuable guidance on all legal aspects, from initial title checks to the final purchase agreement, ensuring that all legal requirements are met and your interests are protected.

In summary, when buying a property with large acreage, thorough due diligence on legal matters such as title and boundary checks, planning permissions, environmental regulations, access rights, and financing considerations is key. Engaging professional legal representation experienced in large acreage properties can greatly assist in navigating these complexities, helping to ensure a legally sound and successful property purchase.

Other financial considerations when buying a property with a large acreage

When buying a property with large acreage, several financial considerations beyond the initial purchase price are crucial. Being aware of these can help you plan effectively and avoid unexpected costs.

Higher deposit requirements: Properties with large acreage often require higher deposits compared to standard residential properties. Lenders may perceive these properties as higher risk, leading to more stringent lending criteria.

Property valuation and survey costs: Accurate valuation of large acreage properties can be more expensive due to their size and complexity. You may also need specialized surveys to assess land quality, boundaries, and potential for agricultural use.

Maintenance and upkeep costs: Owning a large acreage property can come with significant maintenance costs. This includes land management, repairs, and improvements. If the property includes woodland, farmland, or other specialised areas, these costs can be substantial.

Insurance premiums: Insurance for large acreage properties can be higher than standard home insurance due to the increased value of the land and potential liability issues. If the land is used for farming or commercial activities, additional insurance coverage may be required.

Tax implications: Consider the tax implications of owning and possibly earning income from large acreage property. This includes potential capital gains tax, inheritance tax considerations, and income tax if the land generates revenue.

Running costs: Day-to-day running costs can be higher for large properties. This includes utilities, security, and potential staffing costs if the property is used commercially or requires regular maintenance.

Potential income streams: On the positive side, large acreage properties may offer opportunities for income through farming, leasing land, or developing parts of the property, subject to planning permissions and legal constraints.

Future resale value: Consider the future resale value and marketability of the property. Large acreage properties can be more challenging to sell and may not appreciate in value as quickly as urban residential properties.

Legal and professional fees: Factor in the cost of legal and professional services. Purchasing a property with large acreage often involves more complex legal work, which can increase these costs.

Infrastructure and accessibility: Assess any costs associated with improving or maintaining infrastructure, such as roads, bridges, or utilities, especially in remote areas.
Understanding these financial aspects is key to making an informed decision when purchasing a property with large acreage, ensuring that you are fully prepared for both the initial investment and ongoing financial commitments.