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Thread: Borrowing for over 10 acres
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7th September 2016, 01:08 AM #16
10 Acres ???.
Hi All,
I'm glad the 10 Acres thing was cleared up as they wood be lucky to run 5 Cows on it.
I wood have thought you wood need at least 50 Acres.
Then a House & a Bub coming as well. Going to be a bit of a struggle, but it seems they are young & energetic, so it could work.
They woodn't need to buy meat if they had a cow Slaughtered every now & then.Regards,
issatree.
Have Lathe, Wood Travel.
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7th September 2016, 02:44 AM #17
Hi Stevo
Unfortunately I think your young couple represent a significant risk to any lender. Apart from an approx 10% deposit (which from a lender's perspective is light-on), they have no equity as such which can be used as collateral against the loan, will still be paying rent and other outgoings, and the property is far too small to make a living from. From a lender's perspective they are seeking business finance -- I believe that's what the 10 acre limit on bank mortgage finance represents -- for what is essentially a hobby farm.
From the lender's perspective, higher risk translates to a higher interest rate.
If they really want a rural lifestyle I believe they would be better served to
1. investigate vendor financing. -- possibly including rent to buy -- but I know nothing about the pitfalls of such schemes.
2. buy a property in town, which when they have a bit of equity behind them could be used as collateral for the farm.
3. find a guarantor -- with all the risk that entails for the person providing the guarantee.
4. find rural property with an existing house they can rent.
Should they be able to find a lender willing to advance the required cash at an affordable interest rate, they may wish to consider leasing most of the property to another farmer for agistment. Perhaps if they plan on generating income through agistment, and can show an in principal agreement, a lender will consider their loan application more favorably.regards from Alberta, Canada
ian
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7th September 2016, 11:45 AM #18Senior Member
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Thanks everyone for taking the time to answer my queries, I'll pass on the info and I may even have to PM some of you with furthers questions if thats ok?
Mainly in regards to brokers etc, like I said these guys are in no hurry plus they know how to save well, after building their 1st home and selling that, and coming out in front.
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27th September 2016, 09:19 AM #19Senior Member
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The couple decided to buy an established place of a smaller acreage, (13acres) mainly because of the red tape created by Council and the lenders, when trying to build.
Bank said no prob's, so they are really happy,
So they will be able still put on a couple of steers and a few sheep, (dorpers - no shearing, thank goodness,) plus for you vegans a nice big vege patch with a side dish of herbs a plenty.
Now they just have to pay it back, should take 25yrs give or take.
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