Loan secured on land?

Mr_Spoons

Hi Everyone

My partner recently bought some land with money from an inheritance with a view to starting up a small holding. There is great potential for improvements to be made but we need a capital sum to develop the land further (better buildings, more livestock, water supply etc). The land has been valued at between 60 to 75,000 and I would like to ask if anyone knows a way to get a loan secured on this land? We are not home owners so there is no way to re-mortgage etc. We have considered selling up and starting again, but we have already put a lot of work into the land and we really want to stay where we are and make a go of it.

I have been told that banks are very nervous about giving loans secured on assets, and the only other option we have found is Commercial Finance, which is so expensive as to make it unviable.

Would unsecured loans be worth investigating?

Any advice would be gratefully received.

CLAPTON

try a bank first for a business loan; presumably you have a detailed business plan

I'm sure a bank would prefer to give a loan secured on an asset that one unsecured.

what sort of income do you have?

King_Of_Bling

Mr_Spoons wrote: »

Hi Everyone

My partner recently bought some land with money from an inheritance with a view to starting up a small holding. There is great potential for improvements to be made but we need a capital sum to develop the land further (better buildings, more livestock, water supply etc).

Does the land have outline planning permission for a dwelling?

Mr_Spoons

Hi and thanks for the replies

To answer both points raised, there is no permission for a dwelling but there is an application in progress to apply for consent for some stables and barns which should add some value to the land.

Income is mainly from my self employment and is regular and sufficient to meet our needs, but my partner had some problems in the past and his credit score is not great, so the bank might be a bit reluctant if he applied in his own right, which is where the question of whether the security from the land ownership might make a difference...

Mr_Spoons

*bump*!

Tixy

Hi

Its difficult for anyone to advise without knowing how much you want to borrow, how much both of you earn, any other financial commitments you have and what is on partners credit file.
Unsecured loans might be worth investigating depending on those points.

Its certainly not impossible to get a loan secured on land, but you will need to demonstrate an ability to repay the loan and generally the LTVs are fairly low (much lower than on a residential property for example).
If partner is intending to run the small holding as a commercial venture then the best option should be a business loan, which will need a viable business plan and financial projections.

WhiteHorse

Mr_Spoons wrote: »

I have been told that banks are very nervous about giving loans secured on assets

Eh? This is the Holy Grail. It's unsecured loans that give them the jitters.

Errata

You need a specialist lender, like this one http://www.amconline.co.uk/index.aspx

Firefox1975

Agreed, there are specialist money lenders out there who will lend against land. Interest rates are typically higher though and they will definately want to see your business proposal as they secure charges against the collateral. Expect interest rates of 20% +. also legal fees. I presume you will use the money to fund the development work?Depending on what you do with teh finished product It may be worth VAT registering to Opt to Tax the land and reclaim VAT etc.

How big is the land? £60,000 doesn't buy much?

Paul_the_Painter

What about an agricultural mortgage? Googled it and seem to be a few providers, and agricultural land has actually risen in value over the last few years 10% this year alone - apparantly

geoffky

Paul_the_Painter wrote: »

What about an agricultural mortgage? Googled it and seem to be a few providers, and agricultural land has actually risen in value over the
last few years 10% this year alone - apparantly

That is for viable land..Far too many have been suckered in to buy land for way way over the odds..a farmer near me sold lots off at action and some fools paid 90k for 7 acre plots hoping to get planning permission but its on pure greenbelt..