Park Home Finance: Your Options

Park Home Finance: Your Options

Posted by Justin Allitt in Buying a Park Home, Park Homes, March 15, 2016

Buying a park home can sometimes be tricky.  If you don’t have enough capital to buy a property outright, you might be interested in park home finance.  But how much choice do you have when it comes to securing finance?  Is there a way for you to split the cost of paying for a mobile home?

Here at Sell My Group, we have plenty of experience in helping new buyers understand how finance works with park properties.  Unfortunately, there is a lot of confusion out there!  Crucially, you must understand that while there are ways for you to finance a home, these can work a lot different from what you might expect from a bricks-and-mortar property.

Therefore, it’s always worth looking at the facts in closer detail.  You might hear one source say you can’t finance a park home, while another tells you different!  Therefore, it’s time to set your worries aside and read on for the full lowdown.

Finance vs Mortgages: What are the Differences?

When you buy a park home for the first time, you need to know the difference between financing and mortgaging.  Why?  Simple – you cannot secure a mortgage against a park home.

That’s because a mortgage is a very specific type of finance.  It revolves around listings available on the UK Land Registry.  Therefore, you can only take out mortgages when you actually buy registry land that goes with a home.

For example, a bricks-and-mortar home always builds on top of a small patch of land.  When you secure a mortgage, you don’t just finance the property, but the land it rests on.  This is what the UK Land Registry covers.

What Are Park Home Lease Licences?

So, let’s get back to park home finance.  When you buy a park home, you buy the property outright.  Ownership of the land it sits on is either combined via lease licence or sells separately.  Therefore, when you buy a park home, you don’t technically own its land – you lease it from park site owners.  If land isn’t part of a sale at all, any home you buy becomes a ‘leasehold’ property.

Owning and leasing land are two very different things.  It’s important to know the difference when you buy a park home, versus when you buy a traditional property.  That’s because, when you look for park home finance, the length of your lease, or how much you pay to lease land, can affect how much a finance company will offer you.

What Do Finance Companies Consider?

When looking at park home finance, it’s crucial to know what companies will consider when assessing you.  There’s no need to worry!  However, you must remember that finance companies will consider park homes as ‘non-standard’.  Therefore, there is no template or system which they will follow to offer you a set amount of credit.  Therefore, one size never fits all!  This is why there is often so much confusion surrounding park home finance.  However, there really doesn’t need to be.

Finance companies will take a variety of factors into account when assessing you and your park home.  It’s a good idea to familiarise yourself with these factors, as otherwise, you may not find as good a deal as you might expect.

Here are just a few things a finance company might look into before offering you any form of credit on a park home:

  • How much does the park home cost?  Financiers will need to know the sale price, in total, of your prospective property.
  • What is the address of the park home?  The site and location can have big effects on your final offer.
  • What is the length of the site lease available?
  • What are the full dimensions of the property?  Financiers will need to know this so that they can properly value it.
  • Are there any security measures in place?  As a ‘non-standard’ home, financiers want reassurance when it comes to safety.  Park homes may be safe and secure, but on paper, a financier wants evidence that there is firm security in place.

How Will a Financier Judge a Borrower?

Whenever you apply for credit, it is not just your asset that a finance company will look at.  They will therefore need to carefully consider your needs and history, too!  If you have bought assets on finance before, you may already know the checks and measures.  However, it is worth remembering how park home finance works, and how it differs from other credit.

  • They will want to know how you are going to use your park home.  Are you going to live there permanently?  Will you let it to other people, or will you visit purely for holidays?  Who is going to reside there?  Financiers want to know how long a property will be empty for, too.  Therefore, make sure you know all of the honest answers before you apply!
  • They will need to know how much finance you require to pay towards your park home.  This is probably the first factor they look at.
  • However, be aware that a financier will look carefully at your financial circumstances.  You must keep your financial data with you at all times when speaking to a finance company agent.  Therefore, if you arrange credit via phone, for example, make sure to have statements with you.  Again, you must be honest here – because companies will have the power to check!
  • Therefore, you should also prepare for a credit check.  Not all finance companies ask for this, but many do.  A credit check or report will advise them on how well you pay your bills.  For example, a credit report will tell them if you borrowed money before, and if so, if you paid it back on time.  Companies may ask you to get a check yourself.

Why Do Companies Check So Much?

The reason why finance companies look at all these factors is simple.  They want to know how trustworthy you will be at paying them back!  Unfortunately, no financiers can take you at your word.  With thorough checks, they will look at your situation and let you know how much money, if at all, you can borrow towards the cost of your park home.

If you do not pass a financier’s credit check, you may need to improve your score.  Don’t worry!  There are plenty of guides online which will tell you how to improve your credit rating in the short term.

Combining Finance and Insurance

A specialist finance company, such as one which deals with park homes, will look at the above factors to help build the perfect package for you.  Providing you tick all of their boxes; you should have no problem securing a deal.  However, what finance companies may also do is offer you insurance, too.  However, don’t be too hasty to accept their offers.

Park home insurance will normally cover you for a lot of expense.  It can cover your home, your contents, and even what you intend to use it for!  However, you may not always get the best deal if you combine it with park home finance.  Therefore, it is wise to shop around for the lowest premiums.

In some cases, you might actually find that combining park home finance and insurance actually lowers your premiums.  There really is no guarantee!  With this in mind, therefore, be ready to look at various packages and offers.  You should never have to settle.

How to Get the Best Park Home Finance Deal

To conclude, therefore, how do you get the best finance deal on a park home?  To maximise your chances of finding a great value package, you should shop around.  It’s as simple as that!  Fortunately, thanks to the expansion of the internet, it’s never been easier to compare finance between various companies.

However, it can take some digging around to get quotes online.  Not all finance companies will let you grab quotes via their websites, so make sure to take down numbers and other forms of contact.  This might also work in your favour, as it means you can talk with an advisor over the phone about your options, rather than having to muddle your way through all of the jargon online.

You should make sure to speak to a finance advisor once you have a few quotes to hand.  You might then be in a better position to discuss deals and to negotiate!  It is crucial that you never commit yourself to any one deal or offer, even a package that seems ideal.  Therefore, be ready and willing to compare between three or four different companies.

Financing a park home might not be the same as applying for a mortgage, however, it can still mean that you have to do a lot of digging around.  Buying any kind of home is a big commitment!  It’s one you will be paying for in years to come.  Therefore, take your park home finance search seriously – and don’t submit yourself to a finance company unless you are sure they offer the best package for your needs.  Make sure to check out further guides from Sell My Group to learn more about buying park homes outright.

If you require finance for a park home or holiday home, click on the link below;