How land loan interest works
Interest is charged monthly on the balance owed at one twelfth of the annual rate, and the schedule assumes the rate does not change over the term.
Land loans usually need a bigger deposit than home mortgages, which also means borrowing, and paying interest on, a smaller share of the price.
Worked example
Borrowing £100,000 for £150,000 of land at 7% over 15 years costs £61,789.09 in interest. Over 10 years the interest falls to £39,330.18, though the payment rises to £1,161.08 a month.
Paying less interest
A larger deposit or a shorter term reduces the interest. Some agricultural lenders offer longer terms, which lower payments but cost more in total.
What this calculator assumes
The interest figures come from an amortisation schedule for the land loan: equal monthly payments on one nominal rate, with each month's interest charged on the balance still owed at one twelfth of the annual rate. Agricultural lenders sometimes collect payments annually, which can change the interest slightly.
It leaves out valuation and legal fees, scheme payments and rate reviews, so the total interest is an estimate to compare options with.
Inputs for the agriculture land loan interest rate calculator
Land price
The price of the land.
Deposit
What you're paying upfront. Borrowing less means paying less interest.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Agriculture land loan interest rate calculator questions
How much interest is on a farmland loan?
Enter your figures above. For example, £100,000 at 7% over 15 years costs £61,789.09.
Does a shorter term save interest?
Yes. In the example, 10 years instead of 15 saves £22,458.91.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, it falls and so does the interest.
Does this include fees?
No. Valuation and arrangement fees are extra.