Mortgages For Mobile Homes
Options For Raising Finance To Buy A Mobile Home
You cannot get a normal mortgage on a mobile home, as you would on a traditional brick built house. This is because a mobile home is still legally classed as a caravan.
Getting a loan for a mobile home
Because traditional mortgages are secured on the land the home is built on, you have to pay a Land Registry Charge when you buy. However, when you purchase a mobile home, you do not purchase the land the property is located on and are not eligible for a mortgage. Therefore, if you need a loan in order to buy your mobile home, you may need to find a specialist lender.
If you have a property you can potentially use the equity to raise a loan to buy a mobile home. It may also be possible to secure a loan on the land that the mobile home is parked on.
In some ways, however, buying a mobile home can be a simpler process than that of buying a traditional property. For one thing, you do not have to instruct a solicitor to carry out any conveyancing.
There are specialist companies that will provide finance to purchase a park home that is under 14 years old, but the interest rate will be slightly higher than you would expect to pay on a mortgage. Additionally, these companies will often carry any necessary checks on behalf of you and the lender – for example, they will check that the park the mobile home is located within complies with regulations.
A specialist mobile home loan may offer some of the following benefits
- A fixed rate of interest
- Loan terms of up to 25 years
- Optional payment protection insurance
- Option for lump sum repayments (although settling the loan early may incur a charge, so check with your provider)
Points to remember when buying a mobile home:
- You will usually need to provide a deposit of around 30% to 40%
- Some mobile home finance providers stipulate a minimum purchase price or a minimum loan amount
- Unlike a standard property, you cannot remortgage a mobile home and release equity from it at a later date – something to bear in mind if you plan to buy a mobile home to live in during your retirement
- Unlike mortgages, mobile home loans do not usually offer interest-only repayment options
Other mobile home costs
- Before April 2013 you only needed to pay VAT on the ‘removable items’ in a mobile home – for example, the furnishings. However, VAT now applies to the home itself, too.
- Unless you own land, you will need to rent a pitch to keep your mobile home on. You will have to pay rent to the owner for the pitch for your home.