Agriculture is a multi-generation business and as such, AMC can provide long term loans which can even pass to the next generation without being reviewed. This is becoming more unique in the marketplace as other lenders generally now include review clauses as standard practice.
As interest rates have been so low for so long, this sound principle may recently have been overlooked, but with so much political and economic uncertainty at the moment, it is a wise rule to follow.
A repayment loan with £500,000 outstanding and 15 years remaining may currently be costing the business around £3,500 per month, but if restructured on the same interest rate over 30 years, would cost around £1,400 per month less and, if on a variable rate basis, the borrower is also at liberty to repay the loan earlier if cash flow permits.
Provided there is a clear succession plan for the farm, the age of the current borrowers is not necessarily a problem when it comes to extending the term.
In many cases, AMC can also offer non-reviewable long-term interest-only facilities to further minimise monthly commitments.
The timing of the purchase of neighbouring land can rarely be planned so buyers often find themselves with existing financial commitments meaning that the purchase can seem out of reach.
However, an AMC interest-only facility can make the prospect much more affordable, with a plan to repay the capital when existing loan commitments end.
Many businesses are currently turning to AMC to lock in their long-term borrowing costs at the current favourable rates and, unlike many of the high street banks, AMC still provides fixed rate terms of anything up to 30 years.
If you would like to discuss the potential benefits of an AMC facility, why not pick up the phone today and speak, in complete confidence, to Jeremy Watson or James Collier. (Full contact details available by clicking on either of their names or pictures below.)