Purchasing an equestrian facility can be a good investment, but it comes with its challenges too. Before you make the final decision to buy the facility, you need to have all the facts right and weigh your options accordingly. In this article, we show you how to buy an equestrian facility with a Horse Farm mortgage.
Why do you buy an equestrian property?
The first question to ask yourself before you buy an Equestrian facility is, ‘Why do I need to buy an Equestrian property?’ Equestrian properties fall under two main categories—residential and commercial. The type of property you choose has different factors to consider.
However, back to the focus of this article, how do you buy an Equestrian property with a Horse Farm mortgage? The process of acquiring a mortgage for an Equestrian facility varies greatly based on whether you’re buying the property for private use or commercial purposes.
An Equestrian facility can serve a private purpose where you just use it to keep your horse. Alternatively, it could be a commercial premise where you use it as a livery yard, riding school, show center, or a competition yard. Find a reliable financier such as United Farm Mortgage to discuss your priorities.
Choosing a Horse Farm Mortgage for an Equestrian Property
Before you decide to take a horse farm mortgage, you should understand the four main elements of any mortgage agreement.
- Principal: The principal refers to the initial amount of the mortgage. It’s the amount you request and given by the loan company.
- Interest: Interest is the sum added to the principal amount, which you’re supposed to pay back with the principal after an agreed period.
- Taxes: Any mortgage payment attracts property taxes, which vary depending on the location of the property. After paying the principal and the interest, you also need to pay the taxes.
- Insurance: The insurance amount covers any unforeseen circumstances. The amount is often less than the taxes.
Understanding Horse Farm Mortgage Payment
The type of mortgage agreement you take depends on how much you’re willing to pay back as principal, interest, and insurance. It’s important to note that all mortgages operate on the same principles. The difference lies in the way you would like the financier to structure your mortgage agreement.
In all cases, the duration of payment and the amount to pay depend on two main factors:
- Long or short-term payment
This is the first thing to consider. You should know the right term for you as well as how much you can afford. The rule of thumb is: the longer the term, the higher the interest rates.
- Adjustable or fixed interest rates
A mortgage can attract three types of interest rates namely fixed, adjustable, or interest-only. However, interest-only rates are very rare compared to fixed and adjustable interest rates.
A fixed interest rate comes with stability in rate payment. You pay the same interest for as long as your mortgage lasts. Adjustable interest rate is variable and starts at a lower rate at the initial stage. However, the rate changes after the expiry of the agreed initial rate. Finally, an interest-only mortgage starts at a lower rate in the initial stage but increases in the final phase of the mortgage payment.
At United Farm Mortgage, we’re flexible. Contact us to learn more about how to purchase an Equestrian property with a horse farm mortgage.
