Smallholding Mortgage

[DavidMcConville]

Hi, I am in the process of buying a farmhouse in good condition but with a U-shaped steading at the rear which is not developed. The plot size is 9 acres and is located in central Scotland Perthshire. I didn't realise how difficult these properties are to mortgage.

Residential mortgages won't work because of the acreage and the steading.
Commercial mortgages won't work because there isn't a current business in situ.

I currently have an unregulated bridge in place to cover the sale in order to meet the entry date (Scottish Law is different to English Law). If anyone has been through this before, please could you point me in the right direction in terms of how to secure a (re)mortgage?

Thank you, David...

 

[Dry Rot]

I was in a similar position back in the 1970s (with a similar property) but managed to keep my head above water with a bank loan guaranteed by a relative. I was hit hard by bank charges and interest rates but the deal was too good to miss and the guarantor could see that. Surely your bank manager should be able to come up with some ideas if his bosses won't allow a loan?

 

[Agrivator]

If I was selling it, and wanted you to buy it, I would sell you the farmhouse and garden for £xxxxx. And at the same time, I would
pledge to sell you the rest for a notional sum.

I know it might have future implications re. stamp duty and CGT, but .......

 

[Courier]

If I was selling it, and wanted you to buy it, I would sell you the farmhouse and garden for £xxxxx. And at the same time, I would
pledge to sell you the rest for a notional sum.

I know it might have future implications re. stamp duty and CGT, but .......

Maybe split the transactions between two tax years i.e. 31st March and 7th April ?

Would need specialist Scots accountancy law advice....

 

[oldoaktree]

Have you tried a residential mortgage? I’m asking because that’s how I bought my small spot. Possibly say that you just want the land for your horses

 

[goldeneagle]

Might be worth trying AMC won’t be as attractive a rate as residential but will be ok assuming you have big enough deposit for the property.

 

[DavidMcConville]

Have you tried a residential mortgage? I’m asking because that’s how I bought my small spot. Possibly say that you just want the land for your horses

Yep been down the resi route. It's the steading that seems to be the problem. I will figure soemthing out...

 

[betweenthelines]

See my post in the other "mortgage" thread

 

[Donkey Oaty]

As a mortgage broker, I am surprised that you can't get a resi mortgage on this. I'm happy to discuss it and look into it for you.

 

[oldoaktree]

Yep been down the resi route. It's the steading that seems to be the problem. I will figure soemthing out...

Good luck as others have said try a broker

 

[DavidMcConville]

Good luck as others have said try a broker

Thank you. I will try a different broker tomorrow.

 

[DavidMcConville]

As a mortgage broker, I am surprised that you can't get a resi mortgage on this. I'm happy to discuss it and look into it for you.

Thanks I am happy to speak to you on Monday. We have had 38 lenders say no so far. The main reasion each time from the lender is that the stone steadings are the problem. My broker has had one offer from a building society but at 6.9%. I said no obviously!

 

[Highland Mule]

Thanks I am happy to speak to you on Monday. We have had 38 lenders say no so far. The main reasion each time from the lender is that the stone steadings are the problem. My broker has had one offer from a building society but at 6.9%. I said no obviously!

My advice would be to stop calling them steadings. You’re buying a house with outbuildings, that’s all. Don’t mention any complications, get a fresh valuation that’s simple and refers to a house in extensive grounds etc.

 

[renewablejohn]

Had to split our farm into two in terms of land registry. The farmhouse in joint names on which we got a residential mortgage the land just in my name. Seller was happy to amend prices accordingly so that land was only a peppercorn 1 pound but full declaration made to HMRC and land valuation agreed for tax purposes at commercial land valuation rate. Lender will still do there own independant valuation of farmhouse before making any lending decision.

 

[Highland Mule]

Surprisingly from you, that's quite a good and helpful suggestion. I do refer to them as Steadings throughout as led by the sales agent. I will amend that to outbuildings. Thank you!

I’ve been saying it from the start - don’t complicate things and keep it simple. Not my fault if you won’t listen.

Mine is the voice of experience.

 

[Highland Mule]

Hahahaha I was being sarcastic. Do you really think the mortgage companies care how my broker refers to the buildings in the back...

Yes, I do. And I suspect you know they do too. If I can manage a far bigger place on a domestic mortgage simply by telling them I was buying a house and land, then my experience would beat that out too.

Maybe I should be the one laughing - I’m the one with the mortgage after all - and at <0.5% too.

 

[DavidMcConville]

Had to split our farm into two in terms of land registry. The farmhouse in joint names on which we got a residential mortgage the land just in my name. Seller was happy to amend prices accordingly so that land was only a peppercorn 1 pound but full declaration made to HMRC and land valuation agreed for tax purposes at commercial land valuation rate. Lender will still do there own independant valuation of farmhouse before making any lending decision.

Thanks for the post. I assume once I land on the right broker my solicitor will have to do similar things. Thanks again.