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mortgage to buy woodland

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 6, 2023

How to get a mortgage to buy woodland in the UK

Owning a forest is an ideal dream for those who love nature and camping. You can make a good investment or start your own business with woodland mortgages.

Although buying woodland is expensive, there are many ways to make it more affordable. This article will explain the various financing options for your woodland investment and how a specialist broker could help you find a woodland mortgage.

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What are your options for buying woodland areas?

Do you live in the UK? Are you looking to purchase a piece of land surrounded by forest or woodland? Understanding how a woodland mortgage works for this property and how finance works are essential. It will be different to a residential property mortgage.

This guide will cover everything you need to know when buying woodlands with a mortgage. This guide will also tell you what interest rates to expect and where you can get the required expert assistance.

Click the link below for free mortgage advice. We have a few mortgage providers lending a land mortgage. When giving you mortgage advice, they can also explain the difference between residential and land mortgages.

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Is it possible to get a mortgage for a woodland purchase?

Yes, it is possible. However, the process will be slightly different to a traditional residential mortgage. It is rare to find forests in the UK, so that most lenders won’t offer mortgages on them. Your reasons for purchasing the land are very important because there aren’t a lot of lenders that can finance it. Click the link below to find a woodland mortgage specialist.

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The land is unique; the calculation of the loan to value will include elements that aren’t usually applicable. You don’t have to take out a standard mortgage. There are other options for purchasing woodlands with a land mortgage.

  • You can use a commercial mortgage.
  • You can buy woodland with your pension or SIPP.
  • To refinance another property and get a mortgage on the woodland.
  • Purchase of woods using cash buyers.

Calculating how to finance the purchase of woodlands

It will depend on how big the land is and what your plans are for it. For example, a smaller area of wooded land might be more affordable. This situation could open up additional financing options.

You may need more land if your goal is to open a business or build on it. You might need a commercial or agricultural mortgage. Each case is unique and has its pricing.

We provide mortgage advice for land mortgages. We work to get mortgage approval for your business venture.

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Use a mortgage calculator.

These mortgages are bespoke and customised to your needs, so a standard mortgage calculator will not work. Although you’d probably get an idea of the cost and payment, the final numbers will likely differ.

Loan-to-Value (LTV) caps may be in place for certain mortgages. This means you would need to make a 30% deposit, depending on the property’s current price. Your annual income will determine how much you can borrow to purchase the land.

How to get a mortgage on a woodland or forest property

It will vary depending on where you want to purchase land and your goals. You can follow some steps to ensure you get the best mortgage deal and structure your finances as efficiently as possible.

Step 1: Gather your personal information and plan details

You will need all of your personal information to be able to get a mortgage. These include a photo ID, proof of address, bank statements and information about your income (including whether or not you are an employee or self-employed).

You should also plan the purchase of any woodlands or forests you are interested in. You should research the plot you are interested in and get an idea of the cost. If you plan to establish a business on the land and set goals, make sure your business plan is clear.

Step 2: Talk to an expert about your plans.

Once you have all the relevant information, you should discuss your options with an expert advisor.

Talking to an expert broker during this stage will allow you to assess your plans and provide guidance on areas that need clarification or improvement.

We can help you avoid any rejection and marks on credit files. Some lenders will not offer mortgages for woodlands, and others will be very specific about what they will allow. A specialist broker will help you find the right lender for land mortgages. We will ensure you match their lender criteria.

Step three: Start your application.

After your expert mortgage advisor has reviewed all of your plans and determined the best lender to approach, they’ll help you manage your application for residential or commercial financing. The benefit of having an expert on your side is that they can take care of everything from start to finish.

Once your application has been submitted, your broker will keep you informed throughout the process of the land mortgage. You can concentrate on the future property or business plans while they deal with the mortgage approval and stress.

It can be hard to find a qualified and experienced mortgage broker. We offer mortgage advice free of charge.

We work with specialist brokers in specific areas of land ownership and land mortgages.

Click the link below to begin your land mortgage dream.

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Examples of interest rates and lenders

As of July 2022, there were still woodland mortgage options with an interest rate of around 6.5%. The terms and rates available will depend on your personal situation, where you live, how you intend to use the land, and what you have to do with it.

While most banks and high-street lenders won’t offer products to their customers, some lenders will discuss secured land loans or woodland mortgages.

  • Ecology Building Society
  • Shawbrook Bank
  • Norton Finance

Your personal circumstances and plans will determine the right mortgage structure for you. Talking to a specialist broker is the best way to learn more about all of your options for buying woodland.

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Refinance a forest mortgage

It is possible to remortgage your residential mortgage to a better deal with an existing lender, the same as with a woodland mortgage.

They should have all relevant information about the land. Remember that many mortgages have an early repayment fee if you want to refinance woodlands or forests you own. Before you make any changes, ensure you verify this information.

You may want to do something completely different with the woods. There are also new loan options available that may not have been available when you first took out the loan.

A specialist in woodland mortgages will be able to explain the current market and help you decide whether to move to another lender or stay.

What are your options when it comes to financing woodlands?

The type of mortgage you choose will depend on the amount of land you are buying and what purpose you have.

A woodland mortgage can be a great option if you want to buy a small piece of wood for conservation purposes or just to have a private place to camp. A smaller area might make it more affordable to remortgage your home or release equity.

You will need more land if you want to start a business. A land, commercial or agricultural mortgage is something you should look into.

If you are unsure which option to choose, mortgage brokers specialise in woodland finance. We can help you find the best finance for your situation, thanks to their knowledge, experience, and relationships with lenders.

Woodland mortgages

The product is primarily intended for someone who wants a small piece of woodland to help protect the environment. These woodlands are suitable for investment, recreation or as a sanctuary.

Woodland mortgages tend to be more expensive than residential because the lender will need to take longer for the property to sell if it is repossessed. Ecology Building Society charges 6% interest for its woodland mortgage.

You can borrow up to 70% of the value of the woodland, and it will lend you up to four times your monthly income. Therefore, you’ll need to deposit at least 30%.

For land or agricultural mortgages

A land or agricultural mortgage might be the best option if you plan to work in the woods, such as for timber sales.

These mortgages often have higher interest rates due to the difficulty in selling the land if it is repossessed.

LTV (loan-to-value) for land and agricultural mortgages is typically 70% or lower. Lenders expect to see a plan that shows how the woodland will generate income. A business plan showing how you will make an income from the woods is also required.

Commercial mortgage

A commercial mortgage is the best choice if you plan to build homes or a commercial mortgage. It is not easy to get planning permission for commercial development in woodland.

Commercial development mortgages typically have an LTV of 75% to 80%. However, it can go higher. Most lenders will require planning permission, a solid business plan, and an income forecast if you plan to rent out your property.

Alternatives to a Mortgage

Instead of getting a mortgage for a new property, you could remortgage it and use the equity to purchase a woodland. This might be cheaper because the interest rates for residential properties are generally lower than those for woods. However, you will need enough equity to pay the purchase price.

You could also buy woodland using your pension savings.

Using your self-invested pension scheme or SIPP, you can purchase land or commercial properties.

Talk to a specialist in woodland mortgages.

This type of land ownership can be very complicated. Finding reliable and accurate mortgage advice is problematic because it is a rare field.

We can assess your needs and match you with a tailored mortgage broker. We’ll match you with a specialist broker with a lot of experience securing mortgages suitable for forests and woodlands. Start your journey below:

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Is it a wise investment to buy woodland?

You can, but it depends on where you intend to invest the land.

Can I build a log house in the UK’s woodland?

You won’t usually be allowed to build on wooded areas owned by a residential mortgage.

You are entitled to build tiny cabins for occasional use or to maintain the land. You can build a larger structure if you get a commercial or agricultural loan from a specialist lender.

What is the UK’s value of an acre worth of wood?

It depends on where the land is located. You can expect to pay approximately £10,000 per acre (0.44 hectares). It is essential to consider additional costs such as legal, administration, financing, etc.

Is there a tax advantage to owning wooded land?

Yes! Inheritance tax is not applicable if you have owned commercially managed woodland for less than two years.

Timber from forests is exempt from capital gains and income tax. Capital gains tax is still applicable to land value increases.

Do you require planning permission?

Yes, but you will need permission to build a home. It is possible to modify the land’s use to farm, but it is very unlikely that you will get approval.

It will be much easier to obtain permission from the local authority to open a business, such as a campsite. You may not need permission in some instances if you apply to the Caravan and Motorhome Club for an exemption certificate. They can identify your woodland as a certified location.

Planning permission may be required if you plan to apply for a commercial or agricultural mortgage.

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