Mortgage on a caravan (A Full guide)
In this brief guide, we are going to discuss getting a mortgage on a caravan and any considerations you may have to take into account when getting a mortgage on a caravan.
Can you get a mortgage on a caravan?
No, you cannot get a mortgage on a caravan as a caravan is not a fixed site such as land. You will not be able to get a mortgage on a static caravan, lodges or park homes.
In some cases, you may be able to get mortgage finance as part of a caravan purchase if you are also buying the land.
In some cases, if your park home is built with bricks then you may find that you are able to get a mortgage on it.
To do this you should check the land registry database to see if the property is listed.
You should note that when buying a park home you are not buying the freehold but more likely the leasehold.
How to finance a caravan?
If you want to finance a caravan you may be able to use specialist park home finance. There are some specialist park home finance lenders who will loan up to 80% of the property value.
The park home finance lender will look into your circumstance, your income, the type of property you want to buy etc and then decide on how much they can offer you.
If you have bad credit then you may find it much harder to get park home finance but there may be some mortgage lenders willing to consider you.
Government schemes for mortgages on Caravans
Unfortunately, you will not be able to use most of the government schemes available due to the fact that you are buying a Caravan.
Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.
Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.
Government schemes are not available to you if you are getting a buy to let mortgage.
The Government schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Use a mortgage broker for your caravan
You may want to use an independent mortgage broker to find specialist Caravan finance.
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
FAQs: Mortgage on a caravan
Can you live in a caravan for 12 months?
Yes, you can live in a caravan for 12 months as static caravan homes are now mostly built towards a specification of BS 3632 which means they are built to be habitable for 12 months.
Is living in a caravan cheap?
Living n a caravan is much cheaper than living ina residential home, especially when considering the cost of buying a home and maintaining a home e.g the cost of insurance, the cost of utilities and the council tax costs.
Can you get a mortgage on a mobile home UK?
No, you cannot get a mortgage on a mobile home in the UK as a mobile home is not secured on a fixed land and hence is not registered on the land registry.
Can you get finance on a caravan?
Yes, you may be able to finance a caravan as there are some lenders who offer caravan finance.
In this brief guide, we discussed getting a mortgage on a caravan and any considerations you may have to take into account when getting a mortgage on a caravan.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.