Can you get a mortgage on a park home?

UK Home Improvement

Can You Get a Mortgage on a Park Home?

The topsy-turvy world of mortgages can be difficult to navigate at the best of times. With interest rates fluctuating, confusing legal jargon and the stress of finding a suitable property to purchase all coming into play, getting even the most conventional of mortgages can be a challenge. 

If you’re considering purchasing a park home, the process can be even more complex. 

Wondering whether you can get a park home mortgage? If so, you’re in the right place. In this article, we’ll examine if it’s possible to get a mortgage for a park home, and outline all of the financial options available to you if you’re considering purchasing this kind of property.

Read on to find out more…

What Is A Park Home?

Before taking a look at whether you can get a park home mortgage, it’s important to understand exactly what a park home is.  

A park home is a type of mobile home that people use as their permanent residency. It can also be referred to as a residential caravan and they’re mobile, meaning people can move them from location to location if they desire. However, the majority of people who own a park home tend to remain at the caravan site or mobile home park where they purchased it. This is because a park home is intended as a permanent or long-term residency.

While different to a conventional house, a park home will still contain all of the necessary amenities you’d expect to find in a residency. This includes a bathroom, kitchen, living area and bedrooms.  

Can You Get A Mortgage On A Park Home? 

Park homes offer the owner a range of benefits. As they’re normally based on park home sites in the countryside, they offer a sense of seclusion and freedom that conventional options may lack. 

If this unique way of living seems appealing to you, then it’s essential you have a thorough understanding of the buying process.

Unfortunately, due to their unique nature, park home mortgages are not possible, and banks will not allow you to take out this option for a park home. 

This is because when you take out a typical mortgage, the lender is securing the loan against the value of the property- which includes the land it is on. 

In the case of a park home, you don’t own the land. You only own the physical structure of the property. The land itself is leased from the owner of the site the park home is based on for a fixed period of time. When land cannot be used as security, it is impossible for a mortgage to take place.    

However, in the absence of a mortgage, there are still three routes you can take when buying a park home.

These are as follows:   

  • Park home loans
  • Buying park homes outright
  • Use a part exchange scheme 

We’ll cover all of these options in the next few sections. 

Park Home Loans

One of the most common routes people opt for when purchasing a park home is park home loans. While a traditional mortgage may not be possible, there are plenty of companies out there that offer loans that can be used to buy your park home.

Rates don’t tend to be as competitive as mortgages due to their specialist nature, but they’re always worth looking into. Some lenders will tend to offer you 80% of the fee of the park home with repayments over a 15-year period.   

Before you make your final decision about buying a park home, it’s important to bear in mind that, unlike conventional property, park homes tend to depreciate in value over time. While this may not matter to you too much if you’re planning on living there long term, it does mean that the interest rates and repayment amounts may increase significantly over the period of the loan. And just like with any loan agreement, you will be at risk of the property being repossessed if you run into arrears. Therefore, consider your own affordability carefully before committing to a loan. It’s likely you’ll also need to undergo a credit check before any lender authorises a loan to you. 

It’s also recommended that you shop around various lenders and get a few quotes before deciding which to go for. This will help you establish the best deals as well as ascertain which loan is best for your individual circumstances. 

And, never take out a loan unless the lender is accredited by the Financial Conduct Authority (FCA). They’ll ensure you’re protected throughout the process.  

Buying Park Homes Outright

The second option is buying your park home outright. However, it’s not always possible unless you have a large amount of savings or a pension pot. Typically, park homes start from  around £50,000 but many will cost more than this. 

But, if you’re intending on living off savings or a pension after the move, you cannot spend everything on the property so this may not be a suitable option.

An alternative to using savings or your pension is to release equity from your current home. If you’re in positive equity, the easiest way to buy a park home outright is to simply sell where you’re currently living (as long as you own it, that is). 

Park homes are far cheaper than conventional properties, so you should have plenty of money to be able to do this, but be sure to factor in estate agent fees and conveyancing into your budget. If you’re still paying off your mortgage, you may need to pay early repayment fees, too.   

The biggest negative to this is that selling your property can be time-consuming. So be patient and prepared to wait for your new park home.  

Use A Part Exchange Scheme 

You might want to consider a part exchange scheme. This method will see you sell your home directly to a part exchange company, which will then deduct the value of your current home from the price of the park home.

If your property is worth more, then you’ll receive the rest of the value as a lump sum. This is far quicker than releasing equity and you won’t have to concern yourself with lengthy negotiations or being part of a chain. It’s a good way to simplify the process and get yourself in your park home sooner.      


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