21 February 2020
The simple answer to the question; Can you get a mortgage on a park home? is ‘No’, but that doesn’t mean it’s the end of your dreams to live in or retire to a park home.
Whether you’ve long yearned for a park home by the sea, want to downsize or retire to a more peaceful and less complicated lifestyle, financing a park home isn’t out of the equation.
We’ll explain exactly why a park home mortgage isn’t possible and the other finance options available to you when it comes to buying your residential park home.
Why can’t I get a mortgage on park home?
Park homes are built and sold differently from traditional brick built homes, this is why there is no such thing as a park home mortgage.
When you buy a bricks and mortar house, it is registered with the UK Land Registry, with you as the owner of both the house and land. Therefore, the mortgage is secured against the property’s listing on the land registry. You can’t sell the house, which is a permanent fixture, without selling the land.
When you purchase a residential park home on a park, you only own the home and not the land. The land remains the property of the site owner and is leased to you through a Site Agreement.
How can I finance a Park Home?
Whilst park home mortgages are not possible, there are several ways you could finance your dream park home.
- You could buy a park home outright with savings, a pension or the sale of an existing property.
- Some people utilise the equity in a property by using a part exchange scheme. This can save time and avoid the often feared house buying and selling chain process. If your current property is worth more than your new park home, then you’ll receive the remainder as a lump sum.
- Park home finance is also available through specialist finance companies who help people to buy park homes via a park home loan. These specialists are regulated under the Financial Service Authority (FSA) and understand how park home finance differs to traditional brick built mortgages.
How do Park Home Loans Work?
When it comes to applying for a park home loan, seek out specialist park home finance companies. Typically, finance is available for up to 80% of the home.
As with traditional home loans, interest rates will vary, and every case is different depending on your individual circumstances, the amount and length of the park home loan. Companies could offer you finance of up to 25 years, again depending on your age, deposit and the park home price.
One of the benefits to buying a park home is that there is no stamp duty to pay as you are not buying the land the home sits on (stamp duty is a tax on the land purchased when buying a property).
Park Home Finance Tips
- Shop around for park home loans and get multiple quotes.
- Make sure the finance companies are regulated by the FCA.
- Buying a park home via an established manufacturer and in a reputable park can help with getting finance.
- You can always speak to an Independent Financial Advisor once you have a few quotes to hand.
- Check your licence agreement for the length of the lease of the land on which your home will be sited.
- You don’t need a solicitor, although it’s always good advice to use one.
Whilst park homes may be more affordable than traditional brick houses, you need to think carefully about how you finance the purchase.
If you would like to talk to us about buying a park home then we can provide information on the options. Call us 01842 810 673 or contact us, we’ll be happy to help with your enquiry.