Buying land/ farm loans

PANADOL

just wondering what criteria do banks use when deciding on loans for farmers purchasing land , given that most fulltime farmers are making minimal profits. Do they take land owned as security against land being purchased , as farm incomes in most cases would not cover it . has anybody any experience of this and the banks approach, are credit unions good to deal with (50k loan amount)

Thanks

reilig

PANADOL wrote: »

just wondering what criteria do banks use when deciding on loans for farmers purchasing land , given that most fulltime farmers are making minimal profits. Do they take land owned as security against land being purchased , as farm incomes in most cases would not cover it . has anybody any experience of this and the banks approach, are credit unions good to deal with (50k loan amount)

Thanks

Banks will want something to secure the loan on these days, not just the security of the land that you buy with the money. Ideally it will be other land that has no outstanding loans on it or a family home that is clear of mortgage - although with house prices the way that they are at the moment, it could be a non runner for some banks.

I'm open to correction, but I think that credit unions are for personal loans only. A loan to buy land would be a business loan (Farm Business).
On top of that, in the current financial climate, €50k would be very difficult to squeeze from a credit union unless you had substantial savings with them.

On a further note, my wife approached the local credit union for a €4k loan last year for a course that was going to cost €8k. They approved her for the loan amount and gave her a cheque. She had the other €4k for the course in her credit union account and when she went to withdraw it, she was told that she couldn't withdraw it until the loan was cleared as it was security for it. Why would she borrow €4k from them, pay interest on it and leave €4k in her account. She was fast about going to the bank to borrow the €4k and clear her loan and withdraw her other €4k.

whelan1

reilig wrote: »

Banks will want something to secure the loan on these days, not just the security of the land that you buy with the money. Ideally it will be other land that has no outstanding loans on it or a family home that is clear of mortgage - although with house prices the way that they are at the moment, it could be a non runner for some banks.

I'm open to correction, but I think that credit unions are for personal loans only. A loan to buy land would be a business loan (Farm Business).
On top of that, in the current financial climate, €50k would be very difficult to squeeze from a credit union unless you had substantial savings with them.

On a further note, my wife approached the local credit union for a €4k loan last year for a course that was going to cost €8k. They approved her for the loan amount and gave her a cheque. She had the other €4k for the course in her credit union account and when she went to withdraw it, she was told that she couldn't withdraw it until the loan was cleared as it was security for it. Why would she borrow €4k from them, pay interest on it and leave €4k in her account. She was fast about going to the bank to borrow the €4k and clear her loan and withdraw her other €4k.

you have to have a certain percentage in your cu share account in order to get a loan , in our credit union up until last year you could get 10 times the amount in your shares , this has been reduced to 5 now, due to the recession and the fact that an officer of the credit union had a bad debt written off of over 117,000:eek:... any ways i have been to 2 major banks in the last 6 months and neither are lending out money, one of these banks is in nama and the other isnt , they make up every excuse under the sun not to lend... they will look at your most recent accounts , your drawings , your previous repayment history and your security

Juniorhurler

They will lend 50-70% of the value of the land in some cases and the purchase price in other cases, but you need the balance in an account with them to borrow this amount. This 30-50% buffer is to guard against falling property prices. Also you may need to be an existing farmer, submit a business plan, have virtually no other loans and probably an off farm income.

Shauny2010

You`d also need a good credit record say something like a previous car loan which was paid off in full and on time. An off farm job is a big help also. If you are planning on borrowing for land don`t expect the farm income to pay for it:D

Tipp Man

AIB giving out loans for land alright

2 other banks approached us wanting to quote to see if they could match/undercut AIB - have a lot of good dealings with AIB so stuck with them

whelan1

Tipp Man wrote: »

AIB giving out loans for land alright

2 other banks approached us wanting to quote to see if they could match/undercut AIB - have a lot of good dealings with AIB so stuck with them

aib where not in the market for new customers when i went to them , maybe it was just me:)

milkprofit

aib will give land loan if you show you can meet repayments
Up to 90% with extra security
If not getting on in one branch try another
bring a/c and 5 yr farm plan to show you are serious