If you are over the age of 55 and own a home, equity release is a popular way to raise cash while continuing to live there.
An equity release plan essentially allows older homeowners to access the money they have tied up in their property before it is sold. Money can be taken in one lump sum, or a series of smaller amounts, and used for anything you like. Such as buying a park home!
But what if the property you own is already a park home? In this article, we'll answer the question and explore alternative ways to raise cash for park homes.
Why equity release isn't available for park homes
When you own a park home, only the structure is your property. You rent the land on which it stands from the park owner. That rules out equity release, which is only possible if you own either the freehold or leasehold. With a park home, you own neither.
Also, even though a park home is an excellent investment in many ways (especially if you choose one manufactured by Willerby), it is not going to appreciate in value while you live there. No institution is going to lend money when the loan security is gradually losing value.
Other ways to raise money while living in a park home
If you wish to raise cash while continuing to live the park home lifestyle, there are other alternatives. For instance, many people downsize from their present home to a smaller property that costs less—in turn, freeing up cash.
It's also important to check that you are making the most of any available subsidies or benefits. You could claim housing benefit towards your pitch fees and other living costs, for example. And you should always ensure you get the Winter Fuel Allowance and Pension Credit if you are entitled to them.
Visit the Gov.uk website to check which benefits are yours by right.
Is getting an equity release a good or bad idea?
Opinions vary about whether equity release is advisable. The reason being, it can be a more expensive way to raise money that other types of loan. Also, you have to bear in mind that compounded interest will eat into any legacy you wish to leave behind.
On the other hand, you have the cash you need when you need it, and you get to keep your house. As Money Saving Expert Martin Lewis says, equity release is worthwhile if you understand and accept the drawbacks.
Alternative ways to finance your new park home
If you are considering downsizing to a smaller home on a beautiful holiday park, equity release is just one of the ways you can finance the purchase. You can't get a mortgage on a park home for the same reason you can't get equity release. However, there are lots of finance providers who are specialists in this field.
We are the UK's leading manufacturer of park homes and are always delighted to offer expert advice.
Why not start by browsing our authoritative guide to buying a park home? It covers everything from pinpointing your perfect location to finding the type of finance that's right for you.