Obtaining an Agri-Farm Mortgage in Peterborough, ON, involves understanding the unique aspects of agricultural financing, meeting specific eligibility criteria, and exploring various lending options. Here's a comprehensive guide:

Understanding Agri-Farm Mortgages

Unlike traditional residential mortgages, Agri-farm mortgages are tailored to the specific needs of farmers and rural property buyers. They consider factors like farm revenue, land use, and the potential for agricultural production.

Key Requirements for an Agri-Farm Mortgage

While specific requirements can vary by lender and program, here are common elements you'll need:

• Business Plan: A comprehensive business plan outlining your farming operations, financial projections, and how you intend to generate income from the farm. This is crucial for demonstrating viability and profitability.
• Financial Statements: Detailed financial statements, including proof of income (farm revenue and other sources), assets, liabilities, and cash flow projections.
• Down Payment: Expect a higher down payment than for urban homes. Typically, 20-35% of the property's value is required. Some programs may offer lower down payments for specific scenarios (e.g., if borrowing less than $100,000 from FCC).
• Property Appraisal: An appraisal to confirm the land use and value, ensuring it meets lender and government standards.
• Credit Score: A strong credit score (usually 650+ for institutional lenders, though some private lenders may work with lower scores).
• Collateral: You'll likely need to provide sufficient collateral, including the land, buildings, equipment, livestock, and crops.
• Industry Experience: Many farm financing programs require a minimum of two years of farming experience.
• Legal Status: You must be a legal resident of Ontario and have a valid Canadian Social Insurance Number.

Government Programs and Support

Several government programs are designed to support farmers and make Agri-farm mortgages more accessible:

• Canadian Agricultural Loans Act (CALA) Program: This federal loan guarantee program increases the availability of loans to farmers and agricultural co-operatives. The government guarantees 95% of the net loss on eligible loans.
  • Eligible Purposes: Land purchase, construction/repair of farm buildings, purchase of equipment and livestock, fencing, drainage works, planting trees, and consolidating/refinancing eligible CALA loans.
  • Loan Limits: $500,000 for land purchase and building construction/improvement; $350,000 for all other purposes.
• Advanced Payment Program (APP): This federal program helps farmers manage cash flow by providing interest-free loans (up to $250,000 for the 2025 production period) and additional funds at prime lending rates. It's available for a wide range of commodities.
• Commodity Loan Program (CLP): This program assists farmers in financing crop planting, cultivating, and harvesting expenses, with loans up to $750,000 at the prime lending interest rate.
• Provincial Grants: Many provinces, including Ontario, offer rural development and agriculture incentives.
• Farm Debt Mediation Service: This federal service offers financial counselling and mediation to farmers facing financial difficulties.
• Ontario Feeder Cattle Loan Guarantee Program: This program provides low-interest loans to beef farmers through local co-operatives. Peterborough falls under the "East Central" co-operative.

Lenders for Agri-Farm Mortgages in Peterborough

You have several options when seeking an Agri-farm mortgage:

• Major Banks: Banks like Scotiabank offer flexible and long-term financing for farm businesses, with options for land and equipment acquisition, capital improvements, and refinancing.
• Farm Credit Canada (FCC): The FCC is Canada's largest provider of loans and financial services to farms and agribusinesses. They focus solely on agriculture and offer various loan options, including:
  • Loans or lines of credit for land and buildings.
  • Loans for livestock.
  • Specific programs for women, Indigenous, and new entrepreneurs (e.g., Starter Loan up to $150,000).
  • FCC may not require a down payment for loans under $100,000, and a 10% down payment for loans between $100,000 and $500,000.
• Credit Unions: Local credit unions often understand the local agricultural market well and may offer tailored solutions. Kawartha Credit Union, for example, is involved in local programs.
• Mortgage Brokers specializing in Rural/Farm Properties: Working with a mortgage broker experienced in rural and agricultural properties can be highly beneficial. They have access to a network of lenders (institutional and private) and can help navigate the complexities of farm financing. Some brokers advertise services specifically for Peterborough and the surrounding areas.
• Private Lenders: For those with unique situations, such as bad credit or unprovable income, private lenders may offer solutions, though often at higher interest rates.
• Community Futures Peterborough: This organization offers small business loans and advisory services, including programs that may support farm and food businesses. It also has a Micro-Finance Program (loans from $1,000 to $25,000 for equipment and operating costs, not land).

Steps to Apply for a Farm & Rural Mortgage

1. Assess Your Needs: Based on your income and cash flow projections, determine how much money you need, what you need, and your ability to repay the loan.
2. Develop a Robust Business Plan: This is arguably the most critical step. It needs to demonstrate the viability and profitability of your agricultural operation clearly.
3. Gather Required Documents: Collect financial statements, tax returns, cash flow projections, property details, land use plans, and proof of income.
4. Find a Lender or Broker: Research lenders specializing in farm mortgages or work with an expert mortgage broker like Mike Cara in Peterborough, ON.
5. Get an Appraisal: Arrange for a property appraisal to confirm its agricultural value.
6. Submit Your Application: Provide all required documents and be prepared to answer questions or provide additional information.
7. Await Approval: The approval process can take time, ranging from a few days to several weeks.

Tips for Getting an Agri-Farm Mortgage

• Work with Experts: Partner with a mortgage broker, agricultural consultant, or financial advisor who understands the nuances of farm financing.
• Understand Government Programs: Familiarize yourself with programs like CALA, APP, and provincial incentives, which can significantly reduce borrowing costs.
• Plan for Higher Down Payments: Be prepared for larger down payments than residential mortgages.
• Maintain a Strong Credit Score: A good credit history will open more favourable lending options.
• Detail Your Farm Operations: Clearly outline your farming activities, projections, and how the land will be utilized for agriculture.
• Consider a Contingency Fund: It's wise to have a contingency fund for unexpected costs or delays, especially if building or making significant improvements.

By carefully preparing and understanding the available options, you can increase your chances of securing an Agri-farm mortgage in Peterborough, ON, to support your agricultural endeavours.