Can You Get Equity Release on a Park Home?
Many people wonder ‘Can you get equity release on a park home?’ Unfortunately, you are not able to get an equity release plan on a park home.
This is because park homes are categorised as mobile homes in the UK, which lenders are not willing to loan against.
For this reason, most people are also unable to get a mortgage on a mobile or park home. This is because the lenders loan you the money against the value of the property title, and because you don’t own the land, there isn’t anything to secure the loan against.
If you are wondering ‘Can you get equity release on a park home?’ then get in touch with the team at Equity Release Warehouse for help and advice.
What is equity release?
If you are wondering ‘Can you get equity release on a park home?’ then you first need to fully understand what equity release is and how it works.
Equity release is a type of loan which allows individuals to get access to the money inside their home. This money is a combination of equity, including the initial deposit that they put down, the monthly mortgage repayments and any increase in value that the property has had.
In order to qualify for equity release, you have to be aged over 55 years old, own your own property in the UK worth more than £70,000 and have paid off the majority of your mortgage [1].
You do not have to repay the equity release loan until after you pass away, but you will be charged interest on your loan. You can choose to repay the interest on the loan over the years, as this reduces the amount of compound interest that builds up over the years [1].
You only have to repay the loan until you move into a care home or pass away, in which case your next of kin and loved ones will be responsible for selling your house. The proceeds from the sale of your property will be used to pay off the entire equity release loan.
This means that they will not receive as much inheritance as they might have once thought they were getting, but they will also not be responsible for paying off any of the loan even if the value of the property has reduced significantly.
You are also able to spend the money on whatever you want to. For example, you can use the money on paying off your existing mortgage, before gifting it to a friend or family or using it to improve your home.
You can even opt to receive your money in different ways. For example, some people choose to receive the money in one large lump sum to spend it all at once. Others choose to receive it through a number of smaller, monthly payments to help out with the cost of living. Alternatively, you can choose to opt for a combination of plans.
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Can you get equity release on a park home? – What is a park home?
A park home is a type of mobile home that does not move. It is located on a park home estate, and someone else will loan the land that all of the park homes are located on. However, the park home owner will own the actual park home, as opposed to the land owner.
Park homes are a lot cheaper than traditional homes or flats, some costing as little as £90,000. There are hundreds of thousands of park homes across the UK, with most being situated in the countryside or near the seaside.
For this reason, a lot of people who are looking to retire choose to buy a park home so that they can buy a park home outright, not have to pay off a mortgage and enjoy the countryside during their retirement.
If you are wondering ‘Can you get equity release on a park home?’ then get in touch with the team at Equity Release Warehouse for help and advice.
Why can’t you get equity release on a park home?
Equity release is not available for people who own park homes for a number of different reasons.
The main reason is that when you own a park home you only own the structure of the property, as opposed to the land below. You only rent the land that the park home is on from the property and land owner.
Unfortunately, this means that you are not able to release equity from your park home. This is because you are only able to release equity from a freehold or a leasehold property, and when you buy a park home you are not either a freeholder or a leaseholder.
When a lender loans any amount of money, they want to be confident in the knowledge that any property they loan against is going to sell well when it is once sold.
This is in the hope that they will one day get the money back, plus any interest. Unfortunately, lenders are not confident that the park home will increase in value, or even hold its own value. Basically, they are not confident that they will get their money back.
This makes it tricky for anyone who needs to get their hands on some more money but is unable to sell their home. Even if you do sell your park home, you might not get as much money as you bought it for.
The only way you might be able to save any money by selling your park home is if you move to a cheaper property, which will probably have to be a smaller or older park home.
If selling and downsizing your park home simply is not an option for you, then you might want to see what else you might qualify for.
For example, you might qualify for certain housing benefits which could help you with the cost of living or paying any increasing pitch fees.
If you are wondering ‘Can you get equity release on a park home?’ then get in touch with the team at Equity Release Warehouse for help and advice.
Below is a list of alternatives to equity release, which you might qualify for if you own a park home.
Please call our 24-Hour Helpline: 0330 058 1579
Can you get equity release on a park home? – The alternatives
If you live in a park home and were considering taking out an equity release plan but now do not know what to do, then you might want to consider an alternative option. Below are some of the alternative options that you might qualify for.
1. Consider an unsecured loan
If you want more help financially but are unable to qualify for equity release because you own a park home, then you might want to consider taking out an unsecured loan.
For example, you want to take out a credit card or personal loan. Whilst this might not be for a huge sum, it might help you to get your hands on small amounts of money.
2. Consider selling your park home
If you need more help financially, then you might want to consider your park home and downsizing. This might raise enough money to help pay for any home improvements you might need, covering the cost of living or paying for a once-in-a-lifetime holiday.
3. Consider debt advice
If you are hoping to take out an equity release loan because you are struggling with debt, then you might want to consider seeking some kind of advice, instead of taking out an equity release loan.
After all, you won’t qualify for equity release if you own a park home and equity release is simply another type of loan. Whilst the National Debt line state that equity release is a great way of overcoming any debt issues, they admit that it is not for everyone [2].
You could always talk to Citizens Advice for help and support with your debt, who might consider other options outside of equity release.
Please call our 24-Hour Helpline: 0330 058 1579
Talk to the team at Equity Release Warehouse
If you are currently living in a park home and are wondering ‘Can you get equity release on a park home?’ then you should speak to a member of the Equity Release Warehouse team for help and support.
Our team will be able to provide you with all of the possible alternatives to equity release, and will point you in the right direction to get the help and support that you need. Call our team today on 0330 058 1579.
References
[1] https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs65_equity_release_fcs.pdf
[2] https://nationaldebtline.org/fact-sheet-library/equity-release-ew/
