It might be your dream to buy a property that comes with a lot of land. Large acreage gives you privacy and a sense of seclusion. You also have the space to develop your property, perhaps rear animals, and farm the land, either for yourself or commercially. Outside of farming, you may wish to put the large acreage to good commercial use and develop a land-based rural business.

Whatever your plans, there’s a lot to consider in terms of getting a mortgage. Buying a property with a large amount of land doesn’t need to be that complicated. Large acreage is generally considered anything over 5 acres. There are many lenders that will grant mortgages for large acreage properties while others will only allow a maximum of 5 acres.

The easiest way to ensure you find the right mortgage is to speak with a mortgage broker like John Charcol. We have experience in arranging mortgages for large acreage properties so we know which lenders to approach and what products are available.

In this guide we’ll explain everything you need to know about large acreage mortgages.

Can I Get a Mortgage on a Property with a Large Acreage?

For many, buying a house surrounded by land is their ideal home. Alongside the privacy, a large acreage offers flexibility in how the land is used or protected. In most situations where you simply want to buy a property with a large estate and live there, you shouldn’t have much trouble finding a residential mortgage with large acreage. However, if you intend on using the property or the land for commercial purposes - whether to create a farm or to develop a rural business - you’ll require a commercial mortgage from a commercial lender.

If you intend on using some of the land for residential purposes and some for commercial purposes – e.g. you intend to live in the property but use the land for commercial farming – you may be able to arrange a commercial residential hybrid mortgage through a specialist lender.

Specialist lenders should be able to offer a “semi-commercial mortgage” in case you wish to also use the land for the following commercial purposes:

  • Develop the outbuildings on the land for office use
  • Seek planning permission for residential development
  • Holiday lets and Airbnb
  • Equestrian centre
  • Leasing land to farmers
  • DIY farming
  • Annex for family members
  • Cattery
  • Kennels
  • Staff accommodation

Even if the property you intend to buy and use only for minor commercial purposes, you’ll still need a semi-commercial mortgage or a residential mortgage that allows for up to 40% of the property to be used for commercial purposes. The only caveat here is that if the property has separate access for its commercial and residential aspects, then some lenders will offer 2 separate mortgages.

Depending on your intention and the land itself, the mortgage application process will likely to include a detailed assessment of your plans. It’s also likely that the more complex your requirements, the more likely it is you’re need a mortgage broker to source suitable products from the right lenders.

What to Consider When Finding Mortgages for Properties with Land

The key considerations for getting a mortgage on a property with a large acreage are:

  • Lenders will look favourably on your application if the property and grounds are residential in nature, that the property will be used as a main residence and that there is no obvious commercial use
  • Local building societies often have a higher acreage threshold than high street lenders. They may also lend against properties with agricultural land or land used for horses and horse riding
  • Private Banks tend to have no issues with properties with large acreage, nor with properties that have a mixture of both residential and commercial usage. The minimum loan is usually around £300,000
  • Specialist mortgage providers can step in where otherwise a mortgage application would be rejected due to unusual circumstances relating to the building. This may be due to non-standard construction - such as a timber frame building or a building in a dilapidated state

Specialist lenders can lend against property with acreage which may not be mortgageable via a more traditional route. This may include non-standard construction, such as timber frame properties, timber clad properties and properties that are dilapidated. The finance on offer through this route tends to be at a lower LTV (loan-to-value)

How Much Deposit Do You Need for a Property with a Large Acreage?

If you’re buying a residential house with extensive grounds, the maximum LTV will be between 90% - 95%. This means you’ll need to find at least 5 - 10% of the purchase price of the property as a deposit. On the other hand, if you are planning to take out a commercial mortgage on a property with land, the maximum LTV be 70%. This means you’ll need to find 30% of the purchase price as a deposit.

What Are the Eligibility Criteria to Get a Mortgage with a Large Acreage?

Alongside the deposit, a key consideration for the mortgage application is affordability. Lenders look at your personal income in the case of a residential mortgage, or the revenue from business operations generated by the property or land in the case of a commercial mortgage. The lender will need to be satisfied that you can meet your monthly payments.

For a residential mortgage where there will be no commercial gain from the property or land, you would be permitted to borrow up to 4 - 5 times your personal income.

For a commercial mortgage where you’re looking to set up a business on the property or on the land, the mortgage assessment will be based on your business plan. The assessment cannot include income that is dependent on a future planning application.

What Are the Acreage Limits for Mortgages Typically?

If you’re planning on buying a property with a large acreage for purely residential purposes, it’s possible to find a high street lender who will accept your mortgage application. That said, they will impose limits on how much land they can accept as part of a standard residential mortgage. These limits depend on the lender. Limits vary considerably, with some lenders imposing a 5 acre limit, others a 20 acre limit and a few imposing no limit at all, instead reviewing applications on a case-by-case basis. In the event that the lender has no acreage limit, you should expect to find the range of products available to you restricted. You may also be required to put down a larger deposit and find that the application process takes longer than usual.

If you already have a mortgage, you may wish to speak with your existing mortgage provider to find out what limits they have on properties with larger acreages. This will at least give you information regarding their policies, even though you’re likely to find that other lenders have different thresholds and terms.

Where Can I Find a Mortgage for a Home with a Large Acreage?

If you’re planning on buying a property with a large amount of land, it’s recommended that you contact a specialist mortgage broker with access across the entire mortgage market like John Charcol. That way you can ensure you get the best deal for your situation no matter how complex.

What Legal Aspects Should I Consider When Buying a Property with a Large Acreage?

In addition to the standard searches and checks made through the conveyancing process, you may wish to get advice from a rural solicitor in your area to make checks on the land you intend to buy.

Mortgage providers will need proof of the following if they are in place:

  • Public rights of way, such as footpaths and bridleways
  • Boundaries and boundary ownership
  • Mineral extraction rights
  • Water abstraction rights
  • Sporting rights, such as any long or short-term interests or leases for shooting, fishing, or hunting
  • Riparian (adjacent to water) landowners’ responsibilities and rights
  • Private drainages, such as cesspits and septic tank outflows
  • Wayleaves (access rights) and easements
  • Existing grazing agreements and types, including licences and tenancies
  • Subsidy and grant schemes related to the transfer of ownership if you, as the prospective buyer, have any ongoing obligations.

Other Financial Considerations when Buying a Property with a Large Acreage

Before beginning the mortgage application process, you should note that you must be able to cover both the monthly mortgage payments, as well as all legal and removal fees; these cannot be added to your lending amount.

It’s also worth consulting a solicitor or conveyancer with the appropriate experience to provide advice on the Stamp Duty you’ll pay. The Stamp Duty Land Tax that you’ll pay will be based on the type of land and property you’re planning on buying, as well as how you intend to use them.

If you’re considering purchasing a property with large acreage, contact our team of expert mortgage advisers at John Charcol. We have extensive experience helping buyers arrange mortgages on these types of properties. Contact us on 0330 433 2927 or submit an online enquiry.

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