Getting a mortgage as a farmer

Chriswaddle

Hi there.
I want to borrow 110-115k to build a house on my land. I have a 50 acre farm and work as a teacher as does my wife. We both only work part time with pointless contracts with the bulk of our wages coming from subbing work. I'm assuming the banks won't even consider us based on our teaching jobs, but what would I be able to borrow based on me owning a farm? Could I borrow against the farm? I make a small profit of approx 15k per year on it. Can you use the land as a guarantee etc?
Any help greatly appreciated!

kevthegaff

think u might have a chance when your farm is quite profitable, can you put the farm in as a guarantee? theres only one way to find out

hedgecutting eddie

Chriswaddle wrote: »

Hi there.
I want to borrow 110-115k to build a house on my land. I have a 50 acre farm and work as a teacher as does my wife. We both only work part time with pointless contracts with the bulk of our wages coming from subbing work. I'm assuming the banks won't even consider us based on our teaching jobs, but what would I be able to borrow based on me owning a farm? Could I borrow against the farm? I make a small profit of approx 15k per year on it. Can you use the land as a guarantee etc?
Any help greatly appreciated!

Just wondering wat kinda hse could you build for that amount

Conmaicne Mara

hedgecutting eddie wrote: »

Just wondering wat kinda hse could you build for that amount

A sensible one.

Susie120704

We applied for a mortgage recently and were refused. Mu husband has 180 acres and they would not take the land as collateral. I am a permanent teacher but have a mortgage already which is in massive negative equity so they were basing it just on his income. BTW we are not greedy my house is 150 miles away from where we intend to live together eventually. We were only looking for 70k to renovate so I wish you luck

nqtfarmer

Hi Chris Waddle,
I'm only starting out in teaching but will be in same position as yourself some day. Currently covering a maternity leave 2 hours from home, and can't say whether I'll be in Cork, London or Dubai next year. V. frustrating but I'm still young so will keep at this travelling for a few more years, looking forward to the day when I get back to the farm and will hopefully get a job teaching in the area. I couldn't understand why the banks wouldn't take the farm on as collatoral

1chippy

hedgecutting eddie wrote: »

Just wondering wat kinda hse could you build for that amount

You would build a reasonable3/4 bed dormer with a basic spec for that sort of money if your willing to put in a good bit of hard graft yourself.

Chriswaddle

hedgecutting eddie wrote: »

Just wondering wat kinda hse could you build for that amount

We're looking to spend 150-160k on the build. The balance will be savings and a gift of 15k or so.

Dont be daft

Farm land is a double edged sword in terms of a guarantee

While its a relatively stable asset in terms of value, its also a much coveted one.

Banks like assets that are liquid and easy to move in on. Historically, when banks moved on farms in this country debtors fought tooth and nail to hold on.
I can think of an example close to me were the banks moved on the same farm three times and failed each time to take the asset.
If it was a house or a company the debtor probably would have folded the first time.

And I suppose the elephant in the room is that banks just dont want to give out money for mortgages, and if they can spot any kind of flaw they'll jump on it.

Chriswaddle

Dont be daft wrote: »

Farm land is a double edged sword in terms of a guarantee

While its a relatively stable asset in terms of value, its also a much coveted one.

Banks like assets that are liquid and easy to move in on. Historically, when banks moved on farms in this country debtors fought tooth and nail to hold on.
I can think of an example close to me were the banks moved on the same farm three times and failed each time to take the asset.
If it was a house or a company the debtor probably would have folded the first time.

And I suppose the elephant in the room is that banks just dont want to give out money for mortgages, and if they can spot any kind of flaw they'll jump on it.

Well I think it may be a bit rash to say they don't want to give out mortgages. Banks make their money from mortgages more than any other product, in fact they make scandalous amounts of money from them. Banks want, and I stress want, to give mortgages to people who they ate sure can pay back the repayments ensuring they make the couple of percent. A couple of percent of hundreds of thousands is a lot of profit.
I do take your point about taking as farm as a form of collateral. That's the reason I put up this post really, just to see if anyone thought otherwise. It's more so the profit I make that they would be bothered about I suppose?

1chippy

Take your time and start building with what you have to spare. you would be surprised where it would get you. Leave savings alone if you can and just put away a nominal but regular amount into that account while building, bring the house on as far as you can while still keeping things just ticking over and then try use the partially built house as collatoral. You will be keeping all options open excluding having any form of social life.

grazeaway

1chippy wrote: »

Take your time and start building with what you have to spare. you would be surprised where it would get you. Leave savings alone if you can and just put away a nominal but regular amount into that account while building, bring the house on as far as you can while still keeping things just ticking over and then try use the partially built house as collatoral. You will be keeping all options open excluding having any form of social life.

not quite as straight foraward as that.

this was what i was planning on doing a few years ago when i was looking to build at home. The planning permission was granted back in the boom times but i wasnt in a position/unwilling to take out a massive loan to build back then as trying to get good tradesmen meant speneding crazy money. By the time i had enough saved to get started the crash had happened but i started away myself. looked at getting a morgage but was turned down as i had been mostly self employed working contract work so i didnt have a "permant position". Managed to get a huge amount done by cashing in my savings but i needed to do this as the house needed to get to a certain stage before the planning ran out. We got the house struacture up and the windows in but the house was sitting idle for about 2 years as we were unable to get a morgage to finish it. We decided to work to pay off any debts we had so that we could go looking for a morgage with no other loans hanging over us.

Both myself and my better half changed jobs about 2 years ago so i re-applied last year. Went to my own bank who i have been with since my mid teens and while they let me apply they just made the whole thing very fustrating. off the record the girl in the bank told me that they were not looking to give out mortgages for new builds. it was a similar story with EBS they also told me that new builds were not the types of loans they wanted to give out. when i pushd them on this they told me that the banks wanted to give out loans to people to buy up the houses already on the market rather then adding another potential house to thier loan book.

eventually i got a loan from boi, this wassnt straight forward either as i had to give them my accounts for the last 3 years, payslips, my banks statments for the last 3 years and litrilly go through every spend i had made over €1000 euro. it was very stressful and fustrating. I ended up having to fill out every form at least 3 times and do up a number of costing breakdowns for the build and also what i had already spent. Eventully of got approval for about 50% of the value of the finished house as i had already contrbuited about 60k to the builld through the site value and the work already done.

One of the thing i was nearly rejected on was getting new build insurance. as i hadnt taken out an insurance policy for the build as i was doing most of the work myself i needed to get this so that the building process would be covered. most insurnace comapines would only cover from a green field site and with a push from base level. i had the roof on so they wouldnt cover me. after spending a few days getting rejections and at the point of giving up i found a place in dublin that would provide cover no matter where i was i the build.

we moved in the end of last year and are still working on the house, but aleast its our house (well ours and the banks).

my advice is to actually go throught the whole application process i know its very fustrating and you'll probaly get rejected and end up wanting to punch someone but it will give you a very good idea of what you need to have in place to get an application. If you want me to give you a full list of every hoop i needed to jump thorugh give me a PM and i'll let you know a bit more.

grazeaway

is there an old house on the farm? you might find it easier to get a loan for a rebuild? if ther ewas an old farmhouse that was of a suitable size you could knock it and rebuild a house of the same size but in a more modern method. Also you wouldnt need to apply for planning

Chriswaddle

grazeaway wrote: »

is there an old house on the farm? you might find it easier to get a loan for a rebuild? if ther ewas an old farmhouse that was of a suitable size you could knock it and rebuild a house of the same size but in a more modern method. Also you wouldnt need to apply for planning

There is actually an old house exactly where we want to build. However when I say old I mean crumbling. And its a small bungalow, 5 rooms. We want to build a large enough house for a family of 5. Id say planning should be more straight forward though with this house being there already?

Dampintheattic

Chriswaddle wrote: »

There is actually an old house exactly where we want to build. However when I say old I mean crumbling. And its a small bungalow, 5 rooms. We want to build a large enough house for a family of 5. Id say planning should be more straight forward though with this house being there already?

Unless you happen to be in Co Clare. The preeks in planning, absolutely specialize, in making you keep as much as possible of the old structure, no matter how bad the condition. Then they force you into absolutely no end of cost and bullsheet, to keep with old methods / styles.

grazeaway

Chriswaddle wrote: »

There is actually an old house exactly where we want to build. However when I say old I mean crumbling. And its a small bungalow, 5 rooms. We want to build a large enough house for a family of 5. Id say planning should be more straight forward though with this house being there already?

many of these old house's had stalls and outhouses attached to them. As these are all one building you can use the same footprint on a rebuild. Also you can add on about a small extenstion out the back with out PP. The height may not be ideal. As there is a dwellling on the site it should back things a whole lot eaiser wrt access and so on as the gaps in the ditches are already in place. Its a lot easier to knock the old building and restart rather then restore. Have a chat with your local planner but make sure you have any decesiosn they make in writing (email or letter). You may not need planning but you then again you might, and the smallest thing could come back to bite ya on the arse

Massey10

Chriswaddle wrote: »

Well I think it may be a bit rash to say they don't want to give out mortgages. Banks make their money from mortgages more than any other product, in fact they make scandalous amounts of money from them. Banks want, and I stress want, to give mortgages to people who they ate sure can pay back the repayments ensuring they make the couple of percent. A couple of percent of hundreds of thousands is a lot of profit.
I do take your point about taking as farm as a form of collateral. That's the reason I put up this post really, just to see if anyone thought otherwise. It's more so the profit I make that they would be bothered about I suppose?

I spent almost 10k before any work was done on my house with self build insurance and the 4k to council and planning costs . I think its hard to do without having the money.Banks also dont make it easy with self build with stage payments .