As you have already faced this, many lenders don’t give out hobby farm loans readily, especially for properties that are over 25 acres or 10 ha (hectares) in size.
However, there are lenders who do lend and may allow you to borrow up to:
- 95% LVR, for a land size of up to 10 ha.
- 95% LVR, for a land size of up to 50 ha.
- 80% LVR, for a land size of up to 60 ha.
- 70% LVR, for a land size of up to 100 ha.
- 60% LVR, for larger agricultural businesses because of the difficulty in financing them.
It is important to note that even the lenders that do lend for hobby farms will be assessing your property before lending you any money. Some of the things that lenders will look at while assessing your loan application are:
- Land size: The land size should be at least 10 hectares to be considered for a home loan. Lenders will be stricter for a farm size over 200 hectares.
- Location: Farms located in remote areas are more difficult to finance. Restrictions can also be placed on home loan according to the postcode of your property however some of our lenders do not have these restrictions.
- Access: The property must have access to good roads however dirt roads are allowed as long as they are maintained properly.
- Services: The property needs to have access to electricity however water and sewer services may not be required.
- Zoning: A hobby farm can be zoned as both rural and residential property (and / or the equivalent according to your state). If the land is zoned as industrial, commercial or for farm use it may not be acceptable for a home loan and you will have to apply for a commercial loan.
- Land use: The property must only be used for personal or investment purpose which means you cannot use it to generate income other than by renting.
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