Remortgage a Park Home

Understanding Park Home Ownership

Before exploring your remortgage options, it is important to understand exactly what park home ownership involves and how it differs from owning a conventional house. These differences directly affect your financing options and the approach lenders take.

What is a park home?

A park home is a prefabricated residential structure that is designed to be lived in permanently and is sited on a licensed residential park. Unlike touring caravans or holiday lodges, park homes are intended as primary residences and are occupied year-round. They are typically single or twin-unit constructions transported to the site in sections and assembled in place.

Chattel versus real property

The most significant legal distinction is that a park home is a chattel, not real property. You own the home itself but not the land it sits on. The land is owned by the park operator, and you pay a pitch fee for the right to station your home there. This is fundamentally different from owning a house where you own both the building and the land (or hold a lease on the land in the case of leasehold).

The Mobile Homes Act 1983

Your rights as a park home resident are protected by the Mobile Homes Act 1983 (as amended). This legislation gives you security of tenure, meaning you cannot be evicted without a court order, and sets out the rules for pitch fee reviews, sale of the home, and other important matters. Understanding your rights under this Act is important when considering financing options.

Pitch agreements

When you buy a park home, you enter into a written statement or pitch agreement with the park owner. This agreement sets out the terms of your occupation, including the pitch fee, review periods, and the rules of the park. Lenders will want to see your pitch agreement as part of any financing application.

Depreciation considerations

Unlike traditional houses, park homes can depreciate in value over time, similar to vehicles. However, well-maintained park homes on desirable sites can hold their value or even appreciate, particularly in areas where demand is high. The rate of depreciation or appreciation depends on factors such as the age and condition of the home, the quality and location of the park, and local market conditions.

Can You Get a Traditional Mortgage on a Park Home?

The short answer is no. Traditional mortgages are secured against real property, meaning land and buildings that are permanently attached to the land. Because a park home is classified as a chattel and you do not own the land it sits on, conventional mortgage lenders will not offer a standard mortgage on a park home.

This does not mean you cannot obtain finance for a park home, but the products available are different from traditional mortgages. Understanding these differences is crucial for making informed decisions about your financing.

Why traditional mortgages do not apply

Traditional mortgages are registered as a charge against the property at HM Land Registry. Because a park home is not registered land, this mechanism does not work. The lender cannot take a charge over the land, which is their primary form of security in a conventional mortgage arrangement.

Park home finance alternatives

Instead of traditional mortgages, park home owners can access specialist park home finance products. These are essentially secured loans where the park home itself serves as security, much like hire purchase or chattel finance arrangements. The finance company may register a bill of sale against the home to protect their interest.

Key differences from mortgages

• Interest rates — Park home finance typically carries higher interest rates than traditional mortgages, reflecting the different risk profile and the nature of the security.
• Loan terms — Maximum loan terms are often shorter than traditional mortgages, commonly up to 15 or 20 years rather than the 25 to 35 years typical of residential mortgages.
• Loan amounts — Maximum loan amounts are usually lower, reflecting the typical value of park homes compared to conventional houses.
• Regulation — Park home finance agreements are regulated by the Financial Conduct Authority, providing you with consumer protections similar to those that apply to traditional mortgages.

While the terms may be less favourable than a traditional mortgage, park home finance can still provide a practical way to purchase or refinance a park home, and competition among specialist providers has helped improve the options available in recent years.

Refinancing Options for Park Home Owners

If you currently have finance on your park home and want to switch to a better deal, or if you own your park home outright and want to release some of its value, there are several options to consider.

Switching park home finance provider

Just as you might remortgage a conventional property to get a better interest rate, you can switch your park home finance to a different specialist provider. This process is similar in principle to a remortgage, though the mechanics are slightly different. The new finance company will assess your home, review your pitch agreement, and if everything is satisfactory, will pay off your existing finance and set up a new agreement with you.

Specialist park home finance companies

There are a number of specialist companies in the UK that offer finance specifically for park homes. These include dedicated park home finance providers who understand the market and can offer tailored products. When comparing providers, look at the total cost of the finance over the full term, not just the headline interest rate, as fees and charges can vary significantly.

Personal loans

Depending on the amount you need, a personal loan from a bank or building society could be an option. Personal loans are unsecured, so your park home is not at risk if you cannot keep up repayments. However, interest rates on personal loans can be higher than secured park home finance for larger amounts, and the maximum available may not cover the full value of your home.

Equity release on park homes

Equity release products designed specifically for park homes are emerging in the market, though they remain less common than traditional equity release for conventional properties. These products allow older park home owners to access the value tied up in their home without making monthly repayments. If this is something you are considering, specialist advice from a qualified financial adviser is essential.

Remortgaging another property

If you own another property, such as a buy-to-let or a conventional home, you could potentially remortgage that property to raise funds. This allows you to access traditional mortgage rates, though you are using the other property as security. This approach is only suitable if you have sufficient equity in the other property and can afford the additional borrowing.

What Lenders Consider When Financing a Park Home

Whether you are applying for new park home finance or looking to switch providers, lenders will assess several factors specific to park home ownership.

The park home itself

Lenders will consider the age, size, condition, and manufacturer of your park home. Newer homes from reputable manufacturers are generally viewed more favourably. Homes built to BS 3632 (the British Standard for residential park homes) are preferred, and some lenders may not finance very old homes that do not meet current standards.

The park and its licence

The quality, reputation, and licensing status of the park are important factors. Lenders want to know that the park has a valid site licence from the local authority, is well managed, and has a good track record. Parks that are members of recognised trade bodies such as the British Holiday and Home Parks Association (BH&HPA) or the National Caravan Council (NCC) may be viewed more positively.

Your pitch agreement

The terms of your pitch agreement are scrutinised carefully. Lenders will look at the pitch fee, any review mechanisms, and the terms relating to the sale or transfer of the home. A standard pitch agreement that complies with the Mobile Homes Act 1983 is generally required.

Your financial circumstances

As with any lending decision, your income, expenditure, credit history, and overall affordability are assessed. Lenders will carry out standard affordability checks to ensure you can comfortably meet the repayments. Because park home finance rates tend to be higher than mortgage rates, the monthly cost relative to the amount borrowed can be significant.

Age restrictions

Some park home finance products have age restrictions, both minimum and maximum. Many residential parks have a minimum age requirement for residents, typically 50 or 55, which can affect the finance products available. Maximum age limits at the end of the finance term may also apply.

Valuation

The lender will arrange a valuation of your park home, often carried out by a specialist park home valuer rather than a conventional property surveyor. The valuation will take into account the age, condition, and specification of the home, as well as the quality and location of the park.

Your Rights as a Park Home Owner

Understanding your legal rights is important when considering park home finance, as these rights affect the security of your investment and your ability to sell or transfer your home in the future.

Security of tenure

Under the Mobile Homes Act 1983, you have a right to remain on the pitch for as long as you comply with the terms of your pitch agreement. The park owner cannot evict you without obtaining a court order, and the grounds for termination are limited. This security of tenure is a key factor that makes park home living viable as a long-term housing option.

Right to sell

You have the right to sell your park home and assign the pitch agreement to the buyer, subject to the park owner's approval. The park owner cannot unreasonably withhold approval. However, the park owner is entitled to a commission on the sale price, currently capped at 10 per cent. This commission should be factored into your calculations when considering the net proceeds of any future sale.

Right to gift

You can gift your park home to a family member, subject to the park owner's approval, which again cannot be unreasonably withheld. No commission is payable on a gift.

Pitch fee reviews

The park owner can review your pitch fee annually, and any increase is typically linked to the Retail Prices Index (RPI) or Consumer Prices Index (CPI). If you dispute a proposed increase, you can apply to a tribunal to determine a fair pitch fee. Understanding how pitch fees may change over time is important for planning your long-term finances.

Park rules

Park rules set out the standards of behaviour and maintenance expected on the park. These rules must be fair and reasonable. Changes to park rules require consultation with residents and, in some cases, approval from the local authority.

Complaints and disputes

If you have a dispute with the park owner, you can seek resolution through the First-tier Tribunal (Property Chamber) in England, or the Residential Property Tribunal in Wales. These tribunals can adjudicate on issues such as pitch fee disputes, breaches of the pitch agreement, and unreasonable refusal of consent to sell.

Practical Tips for Park Home Refinancing

If you are looking to refinance your park home, the following practical advice can help you get the best possible outcome.

Compare multiple providers

Do not accept the first offer you receive. There are several specialist park home finance companies in the UK, and their rates, terms, and fees can vary considerably. Take the time to obtain quotes from multiple providers and compare the total cost over the full term of the finance.

Check for hidden fees

Look carefully at the fee structure of any finance offer. Some providers charge arrangement fees, valuation fees, completion fees, or early repayment charges that can add significantly to the overall cost. Make sure you understand all the charges before committing.

Maintain your park home

A well-maintained park home will receive a higher valuation, giving you access to better loan-to-value ratios and potentially better rates. Keep up with routine maintenance, address any issues promptly, and keep records of any improvements or repairs you have carried out.

Review your pitch agreement

Ensure your pitch agreement is up to date and complies with current legislation. If there are any issues with your agreement, resolve these before applying for finance, as lenders will scrutinise this document carefully.

Seek specialist advice

Park home finance is a specialist area, and getting advice from someone who understands the market can be invaluable. Look for a financial adviser or broker who is regulated by the FCA and has specific experience with park home financing. They can help you navigate the options and find the best deal for your circumstances.

Consider the long-term picture

When evaluating finance options, think about how long you plan to stay in your park home. If you expect to sell in a few years, a shorter-term deal with lower early repayment charges might be more appropriate. If you plan to stay long-term, a longer fixed-rate deal could provide more certainty over your monthly costs.

Understand depreciation

Factor in the potential for depreciation when planning your finances. If your park home decreases in value over time, you could end up in negative equity, where the finance outstanding exceeds the value of the home. Making a larger deposit or choosing a shorter finance term can help mitigate this risk.