Interested in buying a farm

goldjogger

Hello,
This is my first time posting on this thread. I'm looking for some advice on potentially buying land with a house on it and getting into farming.
55 acre land has come on the market near us, with a small 3 bed house that you could live in straight away.
The land has been neglected for years but the house maintained, work would be needed to get the fields back to good condition, currently lots of rushes and poor drainage,no fencing, over grown etc. Also no out houses or sheds.
Both my husband and I have been thinking of farming for a while. He is very much into rare breeds. He comes from a sheep and dairy farming family and my family would be more into the vegetables side of things.
He is working full time and I am self employed part time and also stay at home mom.
What would we need to approach banks for a mortgage? Because there is land does this change the type of mortgage?
Also from a farming point of view, what should we be doing? Neither of us have any farming courses done.
Any advice would be really appreciated.

IH784man

55 acres is a lot to jump straight into

Farmer

IH784man wrote: »

55 acres is a lot to jump straight into

...but if you can afford it, it's good to get it in one piece, rather than buying 30 and finding out that the nearest place you can buy 25 more is 10 miles away

Mooooo

What the banks will be primarily interested in is repayment capacity. If ye can make that comfortably from current income it would help. If depending on farm profit to make the figures work ye would need a business plan and finance may be harder to get. As it's a farm the max term may be 20 years, not sure on that tho as he are buying the dwelling house as well. In the farming side it may be no harm to pop into the local teagasc office to see what he would need as it depends on age etc it think if it's worth doing the courses.

Siamsa Sessions

What enterprise do you have in mind? Sucklers or sheep would probably be the obvious choices. Do you like working with those animals?

You could maybe rent out half of it til you get your “system” up and running.

Planting some of it with forestry might also be an option and would help cash-flow, which would be a guaranteed income to impress the bank manager.

Farmer

Siamsa Sessions wrote: »

.....
Planting some of it with forestry might also be an option and would help cash-flow, which would be a guaranteed income to impress the bank manager......

For forestry, the new agroforestry grants might be worth looking at. It's a bit of the best of both worlds

https://www.teagasc.ie/crops/forestry/grants/establishment-grants/agro-forestry/

Westernrock

Mooooo wrote: »

What the banks will be primarily interested in is repayment capacity. If ye can make that comfortably from current income it would help. If depending on farm profit to make the figures work ye would need a business plan and finance may be harder to get. As it's a farm the max term may be 20 years, not sure on that tho as he are buying the dwelling house as well. In the farming side it may be no harm to pop into the local teagasc office to see what he would need as it depends on age etc it think if it's worth doing the courses.

You can only lump 2-2.5 acres into the mortgage with the house, any land over and above this has to be treated as a business loan. This is apparently a new enough central recommendation and individual banks have their own take on it/ don’t seem to know what they need to do. I have been passed round in a merry go round from banks saying ask the auctioneer to split into two folios and auctioneer saying it’s up to bank to split it how they want it... 🀔🙄🙄. Deposit needed will be higher for the business loan ie. 30% usually and some banks want 10 to 15 year maximum term for these loans but maybe there are still some offering 20years? Whereas the mortgage for the house could be up to 35 years.

As said by others buying a house and 55 acres is no small feat but there are options there to generate income to ofset the repayments so it could be done! Best of luck with it

Mooooo

Westernrock wrote: »

You can only lump 2-2.5 acres into the mortgage with the house, any land over and above this has to be treated as a business loan. This is apparently a new enough central recommendation and individual banks have their own take on it/ don’t seem to know what they need to do. I have been passed round in a merry go round from banks saying ask the auctioneer to split into two folios and auctioneer saying it’s up to bank to split it how they want it... 🀔🙄🙄. Deposit needed will be higher for the business loan ie. 30% usually and some banks want 10 to 15 year maximum term for these loans but maybe there are still some offering 20years? Whereas the mortgage for the house could be up to 35 years.

As said by others buying a house and 55 acres is no small feat but there are options there to generate income to ofset the repayments so it could be done! Best of luck with it

Thing with splitting to two folios is while it may allow the land to be used as collateral for the whole loan depending on deposit is that if it's split into house and farm the seller may want the house at a higher value than land and the buyer the opposite so not so straight forward

Siamsa Sessions

Meant to say too that everyone on this farming and forestry forum is great too. I’ve asked loads of questions over the past few years and got loads of help. Hopefully I can return the favour over time.

Best of luck

blue5000

goldjogger wrote: »

Hello,
This is my first time posting on this thread. I'm looking for some advice on potentially buying land with a house on it and getting into farming.
55 acre land has come on the market near us, with a small 3 bed house that you could live in straight away.
The land has been neglected for years but the house maintained, work would be needed to get the fields back to good condition, currently lots of rushes and poor drainage,no fencing, over grown etc. Also no out houses or sheds.
Both my husband and I have been thinking of farming for a while. He is very much into rare breeds. He comes from a sheep and dairy farming family and my family would be more into the vegetables side of things.
He is working full time and I am self employed part time and also stay at home mom.
What would we need to approach banks for a mortgage? Because there is land does this change the type of mortgage?
Also from a farming point of view, what should we be doing? Neither of us have any farming courses done.
Any advice would be really appreciated.

Don't forget to factor this into cash flow planning over the next 5 years especially if you are thinking of keeping livestock. There are grants available but I think one of you will have to get a green cert, some degrees like horticulture for example can fast track the green cert.

Forestry might be an option on the wetter land, but once land is planted it's permanent. If your forestry payment is going straight to the bank every year for 15 years to meet repayments you may or may not feel great about it. The advantage of forestry is that planting, fencing and prep work will all be covered by establishment grant. Quick guide here https://www.teagasc.ie/crops/forestry/grants/establishment-grants/brief-overview-of-forestry-grant-rates/

Can one of you stay working full time? Banks like that:)

Bass Reeves

OP the loan will come down to your repayment capacity. No bank will lend you to you on a farm business pan where you are a start up. I am ppresuming taht you have a substantical deposit/ back up cash behind you. However I am a bit afraid for you in that you mention that your husband is into rare breeds and your intrest is in Veg farming. Going farming you have to be hard nosed. It a business. A farm of rare breeds and veg on poorly draining farm land is a recipe for disaster. I am not sure if you have taught out your commercial farm plan in taht what system you intend to adopt. You are both working so dairy is not an option I imagine.

Farming heavy land is an art in itself. It is easy to get the land right but maintaining it is the problem. Sucklers are not really an option , a sheep or drystock operation is more than likly the only choice. But know how to run these on heavy land has a steep learning curve. You have to understand the business of farming .

On the plus side 55 acres is a nice block of land and can be fairly commercial. I started with 60 acres 15 years ago and have a nice tidy drystock operation IMO. But I had the advantage of buying dry land (however with no buildings) and having an idea of the operation I wanted to run.

Another plus for both of you is that while setting up for the first 3-4 years you can write off farm losses against income tax. So keep all your reciepts and do not be giving lads cash no matter what they tell you. Get an accountant at the end of the first year and keep your tax affairs up to date. Is there a single afrm payment with the farm and is it in an ANC area. Farm payments can make up a large part of farming income and profit. You will have no GLAS or discussion groups schemes for 2-3 years so be aware of that

Siamsa Sessions

Bass Reeves wrote: »

You will have no GLAS or discussion groups schemes for 2-3 years so be aware of that

Apologies for going off-topic but do you reckon there'll be no pillar-2 schemes like GLAS or KT for another 2-3 years?

Bass Reeves

Siamsa Sessions wrote: »

Apologies for going off-topic but do you reckon there'll be no pillar-2 schemes like GLAS or KT for another 2-3 years?

I do not think therew ill be another new GLAS scheme unti after 2020. The present KT schedule is to run to the end of next year so again 2020 at least

Siamsa Sessions

Bass Reeves wrote: »

I do not think therew ill be another new GLAS scheme unti after 2020. The present KT schedule is to run to the end of next year so again 2020 at least

Makes sense when you say it like that. It's unlikely any pillar-2 schemes, whatever they may be, will be up and running before 2020 or even 2021. And that's before the apparent cut in pillar-2 funding leads to smaller schemes, tighter terms and conditions, and less money.

It affects us at home as we've a few fields that are getting more rushy and I was half waiting to see what GLAS-type schemes might be coming up. Given that nothing will be available til 2020 at the earliest, I might start looking at agroforestry for these fields.

Anyway, apologies again for going off-topic.