Published: 5th July, 2019
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It has come to our attention that some companies are now advertising Park Home Equity Release. PLEASE BE AWARE THAT THIS IS NOT POSSIBLE UNDER UK LAW!
There is an excellent article on this very subject on the Gold Shield Warranty website and we publish a copy of it here for your interest.
Equity release schemes are not available on park homes because, under UK law, park homes are classed as mobile homes, and equity release providers are only willing to secure a loan against freehold or leasehold properties. This is for much the same reason that you can’t get a mortgage on a park home: lenders need to secure the value of the loan against the registered title and as you won’t own the land, there’s nothing to secure the loan against.
Equity release schemes are a type of loan that allows homeowners to access the equity that they’ve built up in their property over the years. Homeowners agree to give up a portion of their equity in exchange for its cash value, and the lender will pay out this equity either in the form of a lump sum, or as smaller payments to provide a regular income. After the borrower dies, the debt (plus interest) is recovered by selling the property.
To secure their investment, lenders want to be sure that any home they lend against is going to sell on the open market, for a price that will cover the full amount of the loan. So, they won’t lend against a property if they don’t think it’s going to hold on to its value. While park homes make wonderful retirement homes, they shouldn’t be treated as investment assets in the same way as traditional homes, as their value will usually depreciate over the years. For this reason, park homes don’t offer lenders enough security to qualify for equity release.
If you need to find a lump sum, then selling your park home might be a better option. If your park home is fairly new, then you may be able to sell it and move to pre-owned park home of a lesser value, netting you a profit.
If selling isn’t an option for you, then make sure you’ve considered every form of financial assistance that may be available to you. Park home owners are eligible for housing benefits, which you can use to help cover the cost of pitch fees and other charges. You can also supplement your income by claiming Winter Fuel Allowance and Pension Credit, so use Age UK’s benefits calculator to make sure you’re getting the benefits you’re entitled to.
While downsizing to a park home can be a great way to make the most of your retirement, these properties are very different to ordinary bricks-and-mortar houses, with their own unique advantages and disadvantages. You won’t be able to get equity release on a park home, but there are still other forms of financial assistance available to retired people living in mobile homes, so be sure to consider all your options before deciding to re-sell.
