Can I get equity release on my park home?

Equity release refers to a scheme that allows homeowners to release the equity in their property to access cash. However, park homes are classified as mobile homes under UK law and do not meet the eligibility criteria for equity release schemes. This means that park home owners cannot access equity release schemes like lifetime mortgage or home reversion plans. Lenders rarely offer home equity loans on park homes, making it difficult for park home owners to release equity from their homes.

The Government estimates that around 85,000 households live in mobile homes on 2000 sites in England. For that reason, it's no surprise that many people will be wondering about their financing options, specifically wondering if you can get equity release on a park home.

In this insight, we are going to explain your options around securing finance using your park home.

Key takeaways:

• Park homes are a type of permanent home that is built in a factory and transported to a mobile home park.
• Park home owners cannot access equity release schemes like lifetime mortgage or home reversion plans as park homes lose value over time and do not meet the eligibility criteria for equity release schemes.
• Specialised lenders can offer loans for park homes, which are secured by the value of the property and can be used for a variety of purposes, including home improvements.
• If you cannot obtain equity release on your park home, other financing options may include personal loans, specialist loans, and seller finance. However, it's essential to research and compare different lenders to find the best option for your individual situation.

A park home is a type of house in the UK that's made to be lived in permanently. It's also known as a mobile home because it can be moved to different places. Park homes are usually found in areas called "mobile home parks" or "park home estates" that are meant for people to live in.

Park homes are usually made of lightweight materials like timber or steel and are built in a factory before being taken to the park. They're meant to be easy to take care of and use less energy. They come in different sizes and styles to fit different needs.

People who live in park homes usually own their home but rent the land from the park site owner. The homes are regulated to make sure they're safe and comfortable.

Why isn't equity release available on park homes?

Park homes lose value over time, and this makes them risky for lenders. People who live in park homes own the house but rent the land. This affects the home's value and makes it hard for lenders. Equity release plans need homes that go up in value to be commercially viable. Park homes do not meet this criteria.

For example, with a home reversion equity release scheme, you agree to sell a percentage of your home in exchange for an agreed amount. The amount you agree is lower than the true value of the property, but also, it is expected that the value will rise overtime. There is no interest to pay with home reversion, the lender makes its money by the discount purchase and the increase in house prices. That makes park homes a bad security for home reversion as the value is expected to fall overtime.

What finance can I get on Park homes?

If you're looking to raise finance on a park home, it's possible to find specialised lenders that can help you secure funding. However, it's important to note that you may not be able to obtain financing through traditional lenders such as a bank.

For example, let's say you're interested in purchasing a longboat for your retirement. You've found the perfect location and boat, but you need to secure financing to make the purchase. You've already spoken to your bank, but they don't offer financing for boats.

In this scenario, you would need to seek out a specialised lender that offers financing for park homes. These lenders understand the unique needs and requirements of park home financing, and may be able to provide you with a loan that meets your specific needs. You can secure the loan for the boat against your park home.

It's important to research and compare different lenders to find the best option for you. Some specialised lenders may offer better rates or terms than others, so it's essential to shop around and find the lender that's right for your individual situation.

Other park home finance than equity release

Just because equity release is not an option for you does not mean you may not get any type of finance. It might be worthwhile looking into these options:

Personal Loans

You may be able to obtain a personal loan from a bank. Personal loans can be used for a variety of purposes, including home improvements on a park home. However, keep in mind that personal loans typically have high-interest rates.

Specialist Mortgages

Another option is to look into specialist Mortgages. These loans are secured by the value of your property, which makes them less risky for lenders. However, keep in mind that if you default on the loan, you could lose your property. Read about second charge loans for more information on specialist finance.

Seller Finance

If you need the money to purchase a new kitchen for example, you might be able to arrange finance directly through the seller. The same might apply with cars, boats and other home improvements sellers.

Getting the right advice on equity release on park homes

If you are not sure where to start with specialised finance, complete the Sunny Fact Find for mortgage advice and second charge loans. We will find the best suited adviser based on the answers you provide. Your adviser will then contact you to explain how they can help. You decide how to proceed.