How agricultural mortgages work
Agricultural mortgages are long-term loans secured on farmland or farm property. They're offered by specialist agricultural lenders and some banks, and terms are often much longer than for other business loans.
Lenders look at the farm's income and accounts and usually lend a smaller share of the value than on a home. Some offer annual, half-yearly or quarterly repayments to fit farm income, while this calculator shows the monthly equivalent.
Worked example
Buying land for £1,000,000 with a £400,000 deposit means borrowing £600,000. At 6.5% over 25 years, the payment is £4,051.24 a month, £1,215,372.89 in total.
Agricultural lenders may offer annual or half-yearly repayments. This calculator works interest out monthly and shows the monthly equivalent, so the dates and amounts of your own schedule may differ.
Before you commit
Check how the farm's income varies from year to year and whether the repayments are affordable in a poor year, not just an average one.
What this calculator assumes
The calculator treats the agricultural mortgage as a single loan on one nominal rate for the whole term, repaid in equal monthly payments, with interest worked out monthly at one twelfth of the annual rate. Farm income is seasonal, so compare the annual total of twelve payments with your yearly cash flow.
It leaves out valuation and legal fees, any scheme payments, and tax reliefs available to farm businesses, so treat the result as a guide for comparing options rather than an offer.
Inputs for the agricultural mortgage loan calculator
Farm or land price
The price of the farm or land.
Deposit
Your deposit. Agricultural lenders often lend a smaller share of the value than home lenders.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Agricultural mortgage loan calculator questions
How long can an agricultural mortgage last?
Terms are often long, sometimes 25 years or more, depending on the lender.
Can I repay annually instead of monthly?
Some agricultural lenders offer annual or seasonal repayments to match farm income. Ask your lender.
What do lenders look at?
The farm's accounts and income, your experience, and the value of the land and buildings.
Does this include fees?
No. Valuation, legal and arrangement fees are extra.