So, what is a Mortgage Stream?
A Mortgage Stream looks and feels like your existing conventional farm mortgage offered by your bank or credit union with some key benefits to bring additional value to producers. The Mortgage Stream is built on the foundation of two documents that farmers have been signing for generations; mortgages and deferred delivery contracts. The combination of the two allows for your mortgage interest payments to be paid in canola, once a year, at harvest. The Mortgage Stream offers a competitive alternative to traditional mortgage products.
A Mortgage Stream is about unlocking the value in your farmland, putting you back in control of your farm finances.
As a farmer, how do I benefit from a Mortgage Stream?
- Higher loan-to-value than competitors: The same amount of land can provide more upfront cash than with other finance options (80% vs. 50%).
- Timing of mortgage payment: Your payments are once a year, at harvest and in canola.
- Minimal annual commitment: Your annual commitment is a very small portion of your canola production.
- Fixed interest rate: Locked in interest rate in a rising rate environment. Interest rates have gone up three times in the last 12 months.
- Interest only: The interest-only mortgage keeps the cash flow in your farm while land values rise.
- Minimum price for your canola: Input takes the canola price risk. Your price is guaranteed for 5 years and is determined at the time of signing.
- Liquidity: The upfront cash provides liquidity, similar to a mortgage, secured line of credit or interest-only mortgage.
- Unlock your equity: We place our security on as few individual land parcels and avoid blanket securitization of all your farmland, allowing you to use your equity to your advantage.
- Use your land for your advantage:
- Expand your farm by purchasing additional land.
- Inter-generational land transfers.
- Restructure your existing mortgages to free up equity locked into low loan-to-value mortgages.
- Buy your inputs off-season when the prices are the lowest.
- Take advantage of discounts on large cash purchases.
- On-Farm Pick Up: We pick up the canola on your farm, saving you delivery costs and saving you the cost associated with additional storage.
- Delivery risk: Any delays in grain handling and transportation are Input’s risk.
What happens if canola prices fall drastically during the contract period?
A Mortgage Stream guarantees the price for the entire term of the contract. Input Capital takes all the risk if the price drops.
What happens if I have a crop failure?
Input Capital requires that our streaming clients carry crop insurance at the 70% level of coverage. Input has several options to help ensure that our farm clients are able to continue farming in the event of a crop failure. The Mortgage Stream has a minimal annual commitment that represents a very small portion of your overall production.
Does everyone qualify for a Mortgage Stream?
There are certain production and financial metrics that our partners require for a Mortgage Stream. We require industry-standard information and we secure our interest with a first mortgage position on farmland.
Does Input offer any other products to help with the 20% down payment needed for land?
Yes. Many producers will qualify for our Capital Stream or Hybrid Stream to provide the necessary down payment.
What documents do the farmers sign?
The main documents are a conventional mortgage, deferred delivery contracts with directions to pay, and crop insurance assignment of indemnity.
What are the farmer’s option at the end of the 5 year term?
A full or partial payout of the principal or rolled into a new term.
Do the funds have to be used exclusively for land?
How does Input Capital determine land values?
Input Capital uses internal desktop valuations based on comparable transactions.
What are the fees to the farmer?
$1,500 for up to 15 titles with an extra $100 for each title thereafter. We also recommend producers receive independent legal advice at their own cost.