Rural mortgages are only offered by specialist lenders.
The main difference between these and traditional mortgages is how the lender assesses the collateral on the loan. A piece of land is deemed as riskier collateral than most properties, so you might struggle to secure finance for certain types of land.
If you are struggling to get a mortgage via the traditional methods you could speak to a specialist lender. They can provide the expertise on a particular area of lending where you’re looking for assistance.
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A lender’s main concern is whether it’s possible to build property on the land you’re trying to buy. They’ll also be keen to hear whether there is access to utilities such as electricity, water or sewerage.
If this is the case, the land will be easy for the lender to sell if they have to repossess it. That makes it a less risky investment in their eyes, so you’ll find it easier to be approved for a rural mortgage with a great rate. The best thing you can do to secure a great rural mortgage is to secure planning permission to build on the land.
Many buyers try to invest in agricultural, but this is less desirable collateral for lenders, especially if it has been registered as green belt land and there is no access to utilities. This could potentially mean years for the lender to sell at the price you paid for it.
A lot of lenders won’t even consider offering rural mortgages on this type of land, while others will only consider applications from buyers with a good credit score and/or a hefty deposit. You can check your credit score here.
Most rural mortgages are only offered with terms of two to five years, although you may be able to negotiate affordable monthly repayments, with a balloon payment at the end of the term.
Also, if you’re planning to build on the land, it should be possible to convert this mortgage into a longer-term loan. Consider applying for a self-build mortgage, with a standard mortgage term of 25 years or more.
You can apply to borrow money against land you already own, but it’s not easy to be approved because lenders rarely see this as reliable collateral. Ultimately, the type of land you own will be key for a lender’s decision to approve your loan.
It is possible to gain rural mortgages on agricultural land, even though lenders are more reluctant to offer this. Here are some factors that will improve your chances of approval.
These three factors will improve your chances of being approved for a rural mortgage. If you’re initially rejected for a rural mortgage, it’s recommended to improve these three factors before applying again.
A bridging loan is designed to have a short term. So, it’ll only be a suitable option if you’re planning to sell or refinance the land within a few days or weeks.
It is reasonably common for buyers to use a bridging loan, while they’re waiting for planning permission to build on the land. After planning permission is granted in this scenario, the next step would be to refinance the bridging loan into development finance and/or a rural mortgage.
| Response | Yorkshire and the Humber | West Midlands | Wales | South West | South East | Scotland | Northern Ireland | North West | North East | Greater London | East of England | East Midlands |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| No | 89.41% | 85.22% | 89.39% | 86.96% | 84.77% | 84.21% | 79.17% | 86.78% | 85.71% | 68.52% | 86.21% | 87.5% |
| Yes | 10.59% | 14.78% | 10.61% | 13.04% | 15.23% | 15.79% | 20.83% | 13.22% | 14.29% | 31.48% | 13.79% | 12.5% |
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