Agricultural loan

Discussion in 'Loans & Mortgage Brokers' started by Simon Trevor, 29th Jun, 2020.

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  1. Simon Trevor

    Simon Trevor New Member

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    Location:
    Bris
    Looking at purchasing an ag property to run cattle on the side. (I'm otherwise a normal salaried employee in the city).

    Seems 143 hec / 350 acres is too big for the typical lifestyle property scenario; beyond what most lenders will do.

    Looks like a commercial type loan is necessary, and I have been discussing costs with an ag broker. I'm not at all familiar with ag/commercial lending, so would appreciate comment as to if these costs are high, low or reasonable:
    - $1000+GST consultancy fee to broker to get the loan process started
    - $3500+GST or 2.2% of approved loan amount
    - the above line to be waived if existing home loan refinanced through broker as part of the transaction
    - estimated $2500 fee for cash flow projection, if it is required (may or may not needed for serviceability reasons).

    Not talking a huge loan - land value around $1,000 per acre. Sounds like may be able to get up to 70% LVR, though 60% should also be doable for me, and mid 3's interest rates.

    Thanks for any comments.
     
  2. Barry from the bush

    Barry from the bush New Member

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    western victoria
    In my experience ag finance using standard brokers in rural areas the costs are carried by the banks or you could approach agri lenders direct interest rate sounds about right
     
  3. Cousinit

    Cousinit Well-Known Member

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    We have two ag/business loans.

    CBA 2.5%

    Rural finance concessional loan 1.23%
     
  4. Lamby

    Lamby Member

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    Simon, we've just settled an ag loan with Commbank on a property thats worth 570k with a lend of $511k and an equity position of 40% (xcol with other rural title). Interest rate of 2.99%.

    Couple of things/questions - which state are you in? How are you planning on servicing? Off farm income or on farm or a mixture of both?

    Those brokerage fees seem pretty excessive based on our experience. Our broker took 0% upfront, was paid a settling/establishment fee at settlement of .05% of the loan amount and is on a % of interest paid by Commbank going forward.

    Some banks such as NAB and Bank SA will lend to 70% and consider it fully secured, some such as Commbank to 60% and some such as Rabobank to 50%.
     
  5. Simon Trevor

    Simon Trevor New Member

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    Thanks for the replies. I have been hesitant about the broker fees and your general feedback seems to be that they are larger than normal (I'm particularly wary of the 'potential' $2500 cash flow forecast fee).

    We are in QLD. Off farm income should be OK to service, but can include an on-farm forecast if necessary.

    CBA, our current bank, initially said no problem as an investment property (crossed with house loan), then a day later spoke to the credit department who said nope (can't do that size). Have put an enquiry through to their ag specific area.
     
  6. Cousinit

    Cousinit Well-Known Member

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    Good post!
    NAB have been a good lender to go with in my experience. They will even do a separate stock mortgage in some circumstances.

    Rural finance are also well worth considering but I think you will need to deal with them directly.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Got one away a couple of years back with CBA, 60 % lend, investment with a decent lease 8000 ha and 800 head of moo moo capacity

    ta
    rolf
     
  8. Cousinit

    Cousinit Well-Known Member

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    How did you go?
     
  9. Simon Trevor

    Simon Trevor New Member

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    CBA were no go. Running a small herd of cattle not profitable enough to cover their ag financing. Admitted they having nothing in-between the residential and ag type loans.

    Have got a bank (top 10) who will do it as a small business loan. Application currently going through assessment. Interest rates slightly higher - 3 and 3 quarter.

    Rural bank were interested, but more complicated and they have to work with Bendigo bank to do the Resi side of it.
     
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