In this brief guide, we are going to discuss getting a mortgage on grazing land, what to consider when looking to get this kind of mortgage.
Getting a mortgage on a grazing land
Getting a mortgage on grazing land is similar to getting any other kind of commercial mortgage. You will be able to get a mortgage on a grazing land if you can provide adequate security in the form of a mortgage deposit or other collateral to secure the mortgage.
As with most commercial mortgages, you can expect the mortgage rates for a mortgage on grazing land to be much higher than residential mortgages and the number of mortgage lenders competing in this market space to be much smaller.
What to consider when getting a mortgage on grazing land
- You may be required to have planning permission
- You will need to pay a mortgage application fee
- You may need to pay a fee to your commercial mortgage broker
- You will need a conveyancer and will need to pay them
- You may need to pay stamp duty commercial property.
- You will need to detail what you plan to use the grazing land for
- You will need to explain your experience for your specific use of the land.
- The mortgage lender may insist on an in-person mortgage valuation.
What mortgage deposit do you need for a mortgage on a grazing land?
You will likely need a mortgage deposit of between 30% to 50% based on your own personal circumstances for a mortgage on grazing land. As mentioned above, some mortgage lenders will also accept other collateral as security for the mortgage.
What mortgage documents do you need for a mortgage on grazing land?
For a mortgage on grazing land, you will need the below documents as well as a business plan for the grazing land.
- Your bank statements for 3 months
- Your utility bills
- Your identification documents such as your passport
- Your P60 payslips for3 months
- Your SA302 tax return if you are self-employed
- Your tax return documents
- An accountants certificate for a mortgage if you are self-employed
- Your self employed accounts if you are self-employed
- Proof of benefits if you receive benefits
- An assets and liabilities statement
Can you use your supplementary income to get a mortgage on a grazing land?
Yes, you may be able to use the supplementary income to get a mortgage on grazing land.
If most of your income is made up of supplementary income then you may be better-looking for a mortgage lender who accepts benefits or a mortgage lender who accepts a huge percentile of supplementary income when considering someone’s mortgage affordability.
The issue is that most mortgage lenders will limit the percentile of how much supplementary income they will attribute to your total income when considering your mortgage affordability.
Some of the benefits and supplementary income mortgage lenders may accept include:
Overseas earned income
- Attendance Allowance benefit
- Carer’s Allowance benefit
- Child Benefit
- Child Tax Credit benefit
- Disability Living Allowance (DLA)
- Incapacity Benefit (IB)
- Industrial Injuries Benefit (IIB)
- Maternity Allowance benefit
- Pension Credit benefit
- Severe Disablement Allowance
- Widow’s Pension benefit
- Working tax credit benefit
Can you get a mortgage on a grazing land if you are self -employed?
Yes, you may be able to get a mortgage on grazing land as a self-employed borrower but your main challenge will be proving to the mortgage lender that your income is indeed reliable.
You will need to adequately evidence the reliability of your self-employed income with all your supporting documents.
Most self-employed mortgage lenders will insist on seeing 3 years worth of self-employed accounts but may accept less than 3 but usually no less than 12 months.
The mortgage lender may then decide on how much of your self employed salary it considers reliable and include this percentile towards your total income.
You may want to consider using a self-employed mortgage broker to assist you.
When applying for a self-employed mortgage on grazing land you wil usually need the below documents:
- Your CV
- Your SA302 assessment return
- Your accountants certificate for mortgage
- 3 years worth of self-employed accounts.
Can you get a mortgage on a grazing land if you have bad credit?
Yes, you may be able to get a mortgage on grazing land if you have bad credit but it really all depends on what type of bad credit you have and how long the bad credit has been incurred.
There are some specialist commercial mortgage lenders who will lend to you if you have bad credit but you can expect to put down a bigger mortgage deposit and expect to pay a bigger mortgage rate.
Bad credit may include:
A debt management plan
A home repossession
Things you can do to improve your bad credit:
- Get a secured credit card to show good repayment behaviour
- Get a credit builder card to show good repayment behaviour
- Get on the electoral roll at your current address
- Keep your credit accounts open as long as possible
- Avoid making too many credit applications in a short time
- Keep your credit utilization below 30%
- Avoid payday loans
Use a Government scheme
Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.
Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.
Government schemes are not available to you if you are getting a buy to let mortgage.
The Government schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Use a mortgage broker to get a mortgage on a grazing land
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
FAQs: Mortgage on a grazing land
Can you get a mortgage on grazing land?
Yes, you can get a mortgage on grazing land using a commercial mortgage.
Can you get a mortgage on a field?
Yes, you can get a commercial mortgage on a field.
In this brief guide, we discussed getting a mortgage on grazing land, what to consider when looking to get this kind of mortgage.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.