If one has to define an agricultural mortgage, it would be said that it is a type of mortgage that facilitates an easy access to an agricultural loan that may be used for purchasing and developing of agricultural land or property. Like most other regular mortgages an agricultural mortgage is also got from different traditional banks or private lending institutions which deal specifically in such agricultural mortgages. The farm mortgages are usually marketed by specialist brokers and also by high street banks which educate and show the farmers the advantages of the farm mortgage.

Often one hears of rural businesses suffering from seasonal and erratic losses due to climatic changes or crop damages. Some rural properties worth millions technically may not be able to generate a hard cash flow. As a result of these cash uncertainties many mainstream lenders hesitate in providing for regular agriculture loans. But things are changing and rural financial help for the growth of agricultural production or development activities are widely available these days.

There are various options and flexibilities associated with an agricultural land mortgage in order to boost the agrian economy. Mortgage loans are made available for both rural properties and farm financials too. Agricultural Mortgage Companies grant loan amounts based on a variety of freehold as well as leasehold properties. Such properties include pastures, smallholdings, arable land, rare breed centres, nature reserves, nurseries and garden centres, orchards, woodlands, etc. The agricultural mortgage corporation offers the option of making under and over payments, depending on the borrower’s varying financial situation. However, if underpayments are made, interest continues to accrue and will increase the outstanding balance on the mortgage loan.

A loan amount of up to 75 percent of the value of the rural property can normally be availed. At times though, 100 percent mortgages are also available to borrower under special circumstances. Having said that, the interest rate charged by the agricultural mortgage corporation on 100 percent mortgages, is usually higher than other instances. Usually the norm for a 75 percent mortgage, is that borrowers can make repayments between 1.5 and 3 percent above that of the Bank of England base rate applicable.