Buying a park home is a big investment and a decision that should not be rushed. First and foremost, the thing that you should be aware of most when considering entering the process of buying a mobile home is that you will not be able to take out a mortgage in the same way as you with a traditional home, made of bricks and mortar.
The reason that you cannot get a mortgage on a park home is that, while you can own the property itself outright, you are still liable to recurring site fees for the land which it is on. With that being said, there are three main methods in which you can finance the purchase of a mobile home, with the best option depending on your own personal circumstances, which are:
While you cannot get a mortgage to finance the purchase of a park home, you can take out a loan with the bank to fund your investment. This, however, will be at a significantly higher rate than what you would expect with that of a mortgage, and you will likely require a higher rate of deposit (around 20% depending on the bank you are applying for a loan from) to be accepted.
As the value of a mobile home is more likely to reduce over time instead of increase, there is a chance that you may not be able to sell the property in order to pay off the remainder of the loan, should you need to, which presents a greater risk for the lender. This is typically why there is a higher rate of interest on bank loans than with a mortgage. Some lenders can offer a loan period of up to 15 years - you should certainly consider the long-term affordability of repaying a loan for any period.
We would always advise shopping around, comparing the rates that you are eligible for with various banks and lenders, as some companies offer specialised loans suitable for the investment of a mobile home, which would be used as security for the loan. If you do not have the immediate funds and/or assets to purchase a park home outright, seeking a lender regulated by the Financial Conduct Authority (FCA) will be your best option if you are set on making the investment.
If you are in a financial position where you can buy a park home outright, this is certainly the best option. Without the costs of loan repayments over a number of years, or the need to fund a deposit, this makes the cost of living much cheaper on a month-to-month basis.
Those that are either close to retirement or have already retired are most likely to have the assets required set aside that can be used for the purchase of a park home. If you plan to make a complete move from your current home to a mobile home, selling your home to free up the funds tied in will most likely leave you with additional money in your pocket following the sale and purchase due to the difference in value between mobile and traditional bricks and mortar homes.
In order to sell your home in order to finance your move, you must have either completely paid off your mortgage or be in positive equity (where the value of the property exceeds the outstanding amount of the mortgage). To finance your caravan, you should carefully budget for the costs involved, particularly if some of the funds raised from the sale of your home will be used to settle any outstanding repayments. You will also have to consider the time it could potentially take to sell your current home, as well as any renovation costs to repair any damage and/or redecoration needed to attract a buyer.
A quicker way of selling your current house to free up funds to finance a mobile home investment is to call on the services of a part-exchange company. This will do away with a potentially long and drawn-out negotiation period, as well as the stress of needing to find a new buyer because one has pulled out at the last moment.
Financing your move through a part-exchange company will see you sell your home in order to use the equity to pay for your new park home by deducting its value from that of your current property. As most park homes are considerably cheaper than the value of a traditional home, you are likely to receive the rest of the value of the sale of the property as a lump sum.
If you are looking to invest in a static caravan to utilise as a second home, then the option of selling your current home is unavailable (unless you already own multiple properties and you are prepared to sell one). The majority of those who look to invest in a mobile home are likely to have either a retirement fund or life savings they have built up over their working lives that could potentially facilitate the outright purchase of a park home.
This may be a good solution if you do not own your home and are instead renting, without sufficient savings in place to buy a traditional home outright, without the need for mortgage repayments. Before doing this, it is recommended that you seek advice from a financial advisor who can go through with you in detail the practicality of using these funds as a finance option, whilst also ensuring that are have enough to support you throughout the process.
For information on the costs of investing in a park home with Allens Caravans, please get in contact with our team today by calling 01564 792 323 today. Equally, you can view all of the available homes to buy by heading to our residential parks page here.