Category: Mortgages

When a property is purchased, sometimes the homeowner will not own the land that it is built on.

Therefore, during the process of seeking to purchase a property, it is always best to double-check which basis that the property and land are being sold before committing.

In this guide, we will explore what Freehold and Leasehold mean and the differences in relation to ownership.

What is the difference between Freehold and Leasehold?

The differences between Freehold and Leasehold are the type of ownership of the land that a property is situated on.

• Leasehold – Leasehold is the arrangement of owning the property only and not the land that it sits on. A lease is then put in place between the freeholder or landlord and the leaseholder, enabling the use of the property for a fixed period of time. Although lease durations vary typically leases are either 99, 125, 500 or 999 years long.

One term of possessing a leasehold will commonly involve payment of ground rent. At the end of the lease period, the ownership reverts back to the freeholder. This type of ownership is common on shared properties such as flats.

A lease determines any enforcement covenants, the rights of way and access granted on the land, any repair and maintenance covenants along with details of ground rent.

• Freehold – With a Freehold status, both the land and property are owned outright and there are no time limits applied. Typically, most houses are sold Freehold, however, new builds may be Freehold or Leasehold and therefore it is worth checking.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Is it Worth Buying the Freehold of a House?

For houses, it’s usually worth purchasing the Freehold should this come available. The benefits of owning the Freehold of a property include; gaining more control of the property, such as deciding how much to spend on maintaining the property, and which suppliers to use, instead of paying ongoing ground rent leasing costs.

In addition to control, there is also independence from any landlords. Anyone who has had issues with a landlord in the past may see this as the biggest benefit!

However, if the property is a flat there are a number of considerations to explore before purchasing the Freehold, such as the responsibility of communal areas and facilities.

In addition, there is the complex issue that one flat owner cannot purchase the freehold of just one flat, everyone in the building would need to agree to buy an appropriate share of the overall freehold.

Shared services such as maintenance and insurance would need to be paid for and therefore there would need to be a process set up to establish the fair distribution of cost, collection of everyone’s contribution of the charges and competitive suppliers to undertake the services.

Eligibility of Buying the Freehold of a House

The Leasehold Reform Act 1967 Legislation, otherwise known as the ‘1967 Act’ gives leaseholders the right to buy the freehold of a property, however, there are a few requirements needed to be eligible to purchase the Freehold of a Leasehold property. To be eligible to buy a Freehold, the current lease must not be a commercial lease and have a duration of at least 21 years.

There are also eligibility criteria on the property itself as follows:

• If the property is split into flats, it must contain at least two flats
• At least 2/3rds should be owned on a leasehold basis (or both, if only two flats)
• The property also must not be part of a charitable housing trust, National Trust or cathedral precinct

Should the Leaseholder and property meet the eligibility criteria, the process of valuing the Freehold would need to be undertaken, known as Collective Enfranchisement or Freehold Enfranchisement.

Costs of Buying the Freehold of a House

The cost of a Freehold will be calculated using three factors as follows:

• The current value of the property
• The cost of the annual ground rent
• The years remaining on the current lease

The 1967 act aims to ensure a fair trade of the lease from the Freeholder to the Leaseholder however the rules of valuing a Freehold have evolved throughout various amendments made to the 1967 Act and is fairly complex to undertake without the help of professional solicitors and surveyors.

There are two valuation methods of valuing the property under the 1967 Act as follows:

• Original Valuation – The property will be valued based on the original value of the site. Properties valued under this method will need to meet the value limits and the lease would need to qualify the original low-rest test. (See Section 9, 1 of the 1967 Act).
• Special Valuation – Should the property not meet the criteria of the original valuation then it would be valued in the Special Valuation Basis, using a marriage value. (See Section 9, 1A/C of the 1967 Act). A marriage value is an increase in the market value of a property following the lease extension. When purchasing a Freehold, 50% of the marriage value is added on top of the cost of the Freehold.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

The valuation method cannot be chosen and will be dictated by the qualification criteria only.

As you can imagine, the valuation process is rather complicated and therefore often requires the input of professionals, however, there are freehold cost calculators available online which may provide an estimate of the costs involved with purchasing a specific Freehold.

Other costs applicable when purchasing a Freehold include the necessary legal fees, property valuation fees, stamp duty and any Freeholder’s fees.

Leases and Mortgage Lenders

Mortgage lenders ideally like there to be at least 50 years remaining on a lease following the end of the mortgage term.

For example, if a chosen mortgage term is 30 years, the lender would often require a minimum of 80 years left on a lease. Lease lengths may be extended by agreement with the Freeholder and will often involve additional costs plus legal fees.

Is it worth buying the freehold of a house summary

There are benefits to owning the Freehold of a property, including control of the maintenance costs, however, the process can be rather complicated from valuation through to any negotiations between the Freeholder and Leaseholder, and therefore it is highly recommended that advice and support are sought from professionals throughout the process.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Purchasing a property doesn’t always guarantee ownership of the land beneath it.

It’s crucial to understand the terms of the property and land agreement before committing.

This guide will demystify Freehold and Leasehold, clarifying how each affects your ownership rights.

What is the difference between Freehold and Leasehold?

The differences between Freehold and Leasehold are the type of ownership of the land that a property is situated on.

• Leasehold – Leasehold is the arrangement of owning the property only and not the land that it sits on. A lease is then put in place between the freeholder or landlord and the leaseholder, enabling the use of the property for a fixed period of time. Although lease durations vary, typically leases are either 99, 125, 500 or 999 years long.

One term of possessing a leasehold will commonly involve payment of ground rent. At the end of the lease period, the ownership reverts back to the freeholder.

This type of ownership is common on shared properties such as flats.

A lease determines any enforcement covenants, the rights of way and access granted on the land, any repair and maintenance covenants along with details of ground rent.

• Freehold – With a Freehold status, both the land and property are owned outright and there are no time limits applied. Typically, most houses are sold Freehold, however, new builds may be Freehold or Leasehold, and therefore it is worth checking.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Is it Worth Buying the Freehold of a House?

For houses, it’s usually worth purchasing the Freehold should this come available.

The benefits of owning the Freehold of a property include; gaining more control of the property, such as deciding how much to spend on maintaining the property, and which suppliers to use, instead of paying ongoing ground rent leasing costs.

In addition to control, there is also independence from any landlords. Anyone who has had issues with a landlord in the past may see this as the biggest benefit!

However, if the property is a flat there are a number of considerations to explore before purchasing the Freehold, such as the responsibility of communal areas and facilities.

In addition, there is the complex issue that one flat owner cannot purchase the freehold of just one flat, everyone in the building would need to agree to buy an appropriate share of the overall freehold.

Shared services such as maintenance and insurance would need to be paid for and therefore there would need to be a process set up to establish the fair distribution of cost, collection of everyone’s contribution of the charges and competitive suppliers to undertake the services.

Eligibility of Buying the Freehold of a House

The Leasehold Reform Act 1967 Legislation, otherwise known as the ‘1967 Act’ gives leaseholders the right to buy the freehold of a property, however, there are a few requirements needed to be eligible to purchase the Freehold of a Leasehold property.

To be eligible to buy a Freehold, the current lease must not be a commercial lease and have a duration of at least 21 years.

There are also eligibility criteria on the property itself as follows:

• If the property is split into flats, it must contain at least two flats
• At least 2/3rds should be owned on a leasehold basis (or both, if only two flats)
• The property also must not be part of a charitable housing trust, National Trust or cathedral precinct

Should the Leaseholder and property meet the eligibility criteria, the process of valuing the Freehold would need to be undertaken, known as Collective Enfranchisement or Freehold Enfranchisement.

Costs of Buying the Freehold of a House

The cost of a Freehold will be calculated using three factors as follows:

• The current value of the property
• The cost of the annual ground rent
• The years remaining on the current lease

The 1967 act aims to ensure a fair trade of the lease from the Freeholder to the Leaseholder, however the rules of valuing a Freehold have evolved throughout various amendments made to the 1967 Act and is fairly complex to undertake without the help of professional solicitors and surveyors.

There are two valuation methods of valuing the property under the 1967 Act, as follows:

• Original Valuation – The property will be valued based on the original value of the site. Properties valued under this method will need to meet the value limits and the lease would need to qualify the original low-rest test. (See Section 9, 1 of the 1967 Act).
• Special Valuation – Should the property not meet the criteria of the original valuation, then it would be valued in the Special Valuation Basis, using a marriage value. (See Section 9, 1A/C of the 1967 Act). A marriage value is an increase in the market value of a property following the lease extension. When purchasing a Freehold, 50% of the marriage value is added on top of the cost of the Freehold.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

The valuation method cannot be chosen and will be dictated by the qualification criteria only.

As you can imagine, the valuation process is rather complicated and therefore often requires the input of professionals, however, there are freehold cost calculators available online which may provide an estimate of the costs involved with purchasing a specific Freehold.

Other costs applicable when purchasing a Freehold include the necessary legal fees, property valuation fees, stamp duty and any Freeholder’s fees.

Leases and Mortgage Lenders

Mortgage lenders ideally like there to be at least 50 years remaining on a lease following the end of the mortgage term.

For example, if a chosen mortgage term is 30 years, the lender would often require a minimum of 80 years left on a lease. Lease lengths may be extended by agreement with the Freeholder and will often involve additional costs plus legal fees.

Is it worth buying the freehold of a house summary

There are benefits to owning the Freehold of a property, including control of the maintenance costs, however, the process can be rather complicated from valuation through to any negotiations between the Freeholder and Leaseholder, and therefore it is highly recommended that advice and support are sought from professionals throughout the process.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Does your ex have to pay half the mortgage after separation? This is an extremely common situation and in this post, we will provide some answers and clarity.

Separating from a previous partner can be a stressful and emotional time as previous memories of buying a property together soon disappear once divorce and separation proceedings have started, and the reality of splitting finances kicks in!

It is also not unknown for tensions to run high during such scenarios resulting in one partner moving out and refuse to maintain their contribution towards the mortgage repayments.

In this guide, we will explore the legalities of splitting the costs of a mortgage once a couple has separated.

Apply for a mortgage today

Joint Mortgages and Couple Separation

Where both parties are listed on the mortgage, the responsibility of ensuring that each of the mortgage repayments is paid in full does not change following a couple’s separation.

Both parties are equally liable to the mortgage lender and therefore should there be any pause or default in the monthly mortgage repayments, the lender would be in touch with both parties.

The responsibility to the mortgage lender does not change despite a revised living agreement and therefore monthly repayments should not cease during any disagreements.

Should repayments cease, the consequences of any additional costs or repossession would also sit equally between both parties.

However, where one party is not listed on the mortgage deed, they will not be responsible for maintaining the mortgage repayments.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What Should I Do if My Ex-Partner Stops Paying Towards the Mortgage?

Should an ex-partner (who is listed on the mortgage) advise that they are no longer willing to pay their share of the mortgage repayments, the first step is to contact the mortgage lender as soon as possible.

Lenders who are kept informed of any circumstance changes are often more willing to show leniency upon the case and even offer reduced monthly repayments or switch the mortgage to an interest-only product while negotiations between both parties are ongoing.

It would be strongly recommended that further advice is sought at this early stage from both a legal and financial perspective to review all options available.

Apply for a mortgage today

Can an Ex-Partner’s Name be Removed from the Mortgage?

Yes, technically an ex-partner can be removed from the mortgage via the process of a transfer of equity. The ex-partner will need to have agreed to be removed from the mortgage before approaching the lender to make the change.

However, affordability criteria would need to be met for the remaining party to reassure the lender that the mortgage can be covered. If the request is refused by the lender, other options can be explored.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What are the Other Options if The Request to Remove the Ex-Partner from the Mortgage is Refused?

It is highly recommended that further advice is sought before exploring further options and making any commitments where financial matters are concerned.

Other options to explore include:

• Explore if an agreement can be made between both parties to continue jointly paying the mortgage. If mediation has not already been attempted between both parties, it may be worth a try. If an agreement can be concluded, it may result in both parties continue to make equal payments, especially if one party has moved out however an agreement would protect both parties’ interests and retains the property, even for investment purposes.
• Another option is to replace the ex-partner on the mortgage with another person who can afford to contribute towards the mortgage repayments, perhaps a family member could assist with stepping in to retain the property.
• Alternatively, there is the option of seeking to move and downsize to a smaller property. This option would require agreement from both parties to sell the property and also would involve additional costs such as estate agent fees, legal costs and stamp duty on a new property.
• Another approach is to apply for a court order to remove the ex-partner from the title deeds of the property but not from the mortgage itself. This would mean that the ex-partner would not have any further claim to the property but would still be responsible for the mortgage repayments.
• Another avenue via the courts is to obtain a court order to enforce that the ex-partner continues to pay. This however can be a lengthy process.
• Lastly, should the current mortgage provider decline a request of removing the ex-partner there may be the possibility of completing this with an alternative provider? It would be worth investigating if as a single person one partner could meet the affordability criteria with a different lender to re-mortgage in one name only. To explore this option, it would be highly recommended that advice from an independent financial advisor (IFA) is sought. An IFA can assist with individual cases and has plenty of market knowledge to advise the differences between affordability criteria of various lenders.

Further Free Advice

In addition to legal and financial professionals, there are other contact points to obtain free advice as follows:

• Citizens advice provide free advice across a range of issues including relationship breakdowns, debt, negotiating with creditors and repossessions. Their national adviceline phone number is 0800 144 8848.
• StepChange Debt Charity provides free expert debt advice, aiming to get finances back on track. Their phone number is 0800 138 1111.
• National Debtline Charity provides free and independent debt advice. Their national adviceline phone number is 0808 808 4000.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Does My Ex Have to Pay Half the Mortgage Summary

We appreciate that separation is an emotive topic however protecting the interests of our clients is at the forefront of our business.

We, therefore, offer an extensive service, taking the time needed to understand the individual circumstances of each case, exploring the various financial options available.

We ensure that the risks and all other considerations involved are fully explained so that each individual can make their own, most suited decisions and future plans. We also always treat all clients with the utmost care and confidence throughout the process.

We highly recommend that an appointment is made with our friendly specialist financial advisors before committing to any decision or the financial avenue.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Does your ex have to pay half the mortgage after separation? This is an extremely common situation and in this post, we will provide some answers and clarity.

Separating from a previous partner can be a stressful and emotional time as previous memories of buying a property together soon disappear once divorce and separation proceedings have started, and the reality of splitting finances kicks in!

It is also not unknown for tensions to run high during such scenarios resulting in one partner moving out and refuse to maintain their contribution towards the mortgage repayments.

In this guide, we will explore the legalities of splitting the costs of a mortgage once a couple has separated.

Apply for a mortgage today

Joint Mortgages and Couple Separation

Where both parties are listed on the mortgage, the responsibility of ensuring that each of the mortgage repayments is paid in full does not change following a couple’s separation.

Both parties are equally liable to the mortgage lender and therefore should there be any pause or default in the monthly mortgage repayments, the lender would be in touch with both parties.

The responsibility to the mortgage lender does not change despite a revised living agreement and therefore monthly repayments should not cease during any disagreements.

Should repayments cease, the consequences of any additional costs or repossession would also sit equally between both parties.

However, where one party is not listed on the mortgage deed, they will not be responsible for maintaining the mortgage repayments.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What Should I Do if My Ex-Partner Stops Paying Towards the Mortgage?

Should an ex-partner (who is listed on the mortgage) advise that they are no longer willing to pay their share of the mortgage repayments, the first step is to contact the mortgage lender as soon as possible.

Lenders who are kept informed of any circumstance changes are often more willing to show leniency upon the case and even offer reduced monthly repayments or switch the mortgage to an interest-only product while negotiations between both parties are ongoing.

It would be strongly recommended that further advice is sought at this early stage from both a legal and financial perspective to review all options available.

Apply for a mortgage today

Can an Ex-Partner’s Name be Removed from the Mortgage?

Yes, technically an ex-partner can be removed from the mortgage via the process of a transfer of equity. The ex-partner will need to have agreed to be removed from the mortgage before approaching the lender to make the change.

However, affordability criteria would need to be met for the remaining party to reassure the lender that the mortgage can be covered. If the request is refused by the lender, other options can be explored.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What are the Other Options if The Request to Remove the Ex-Partner from the Mortgage is Refused?

It is highly recommended that further advice is sought before exploring further options and making any commitments where financial matters are concerned.

Other options to explore include:

• Explore if an agreement can be made between both parties to continue jointly paying the mortgage. If mediation has not already been attempted between both parties, it may be worth a try. If an agreement can be concluded, it may result in both parties continue to make equal payments, especially if one party has moved out however an agreement would protect both parties’ interests and retains the property, even for investment purposes.
• Another option is to replace the ex-partner on the mortgage with another person who can afford to contribute towards the mortgage repayments, perhaps a family member could assist with stepping in to retain the property.
• Alternatively, there is the option of seeking to move and downsize to a smaller property. This option would require agreement from both parties to sell the property and also would involve additional costs such as estate agent fees, legal costs and stamp duty on a new property.
• Another approach is to apply for a court order to remove the ex-partner from the title deeds of the property but not from the mortgage itself. This would mean that the ex-partner would not have any further claim to the property but would still be responsible for the mortgage repayments.
• Another avenue via the courts is to obtain a court order to enforce that the ex-partner continues to pay. This however can be a lengthy process.
• Lastly, should the current mortgage provider decline a request of removing the ex-partner there may be the possibility of completing this with an alternative provider? It would be worth investigating if as a single person one partner could meet the affordability criteria with a different lender to re-mortgage in one name only. To explore this option, it would be highly recommended that advice from an independent financial advisor (IFA) is sought. An IFA can assist with individual cases and has plenty of market knowledge to advise the differences between affordability criteria of various lenders.

Further Free Advice

In addition to legal and financial professionals, there are other contact points to obtain free advice as follows:

• Citizens advice provide free advice across a range of issues including relationship breakdowns, debt, negotiating with creditors and repossessions. Their national adviceline phone number is 0800 144 8848.
• StepChange Debt Charity provides free expert debt advice, aiming to get finances back on track. Their phone number is 0800 138 1111.
• National Debtline Charity provides free and independent debt advice. Their national adviceline phone number is 0808 808 4000.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Does My Ex Have to Pay Half the Mortgage Summary

We appreciate that separation is an emotive topic however protecting the interests of our clients is at the forefront of our business.

We, therefore, offer an extensive service, taking the time needed to understand the individual circumstances of each case, exploring the various financial options available.

We ensure that the risks and all other considerations involved are fully explained so that each individual can make their own, most suited decisions and future plans. We also always treat all clients with the utmost care and confidence throughout the process.

We highly recommend that an appointment is made with our friendly specialist financial advisors before committing to any decision or the financial avenue.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

How can you get a mortgage for a barn conversion?

If you are day-dreaming of developing a derelict barn into a residential property but are wondering what is the best process of obtaining finance to turn your dream into reality, you have come to the right place!

There are a number of options when it comes to self-build finances, and this article will guide you through the process of securing finance for your dream development project no matter the size.

How will a mortgage for a barn conversion work?

A barn conversion could be financed by a development loan which is a type of short-term financial product that can be utilised to build a new property or to develop existing properties.

Such loans are a secured type of lending that can be obtained for a range of purposes including barn conversions.

The finance is released in stages and therefore can be an attractive method of borrowing due to the flexibility offered to the applicant. The key stages are as follows:

• The purchase of the land and/or barn
• Foundations or structural renovation stage
• Eaves height completion
• Completion of watertight stage
• Internal fixtures and fitting stage

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How can I obtain a self-build Mortgage for the Purpose of a Barn Conversion?

Due to the specialised nature of barn conversions, suitable options to source the finances for development can be harder to find due to a smaller number of lenders offering such products.

Therefore, the use of a mortgage broker is highly recommended to aid and streamline the process of sourcing an appropriate mortgage product, comparing lenders as well as providing guidance throughout the application process.

A broker can also liaise with the preferred lender throughout the application, therefore reducing the stress and burden upon an applicant.

The application process for a development loan requires gathering lots of information regarding:

• The applicant themselves including their current personal financial circumstances
• Details of other assets to be used security
• A development plan for the project
• A documented proposed exit strategy to repay the loan

The prospective lender would review an application in its entirety, sometimes requesting further information if needed and will undertake the usual credit and affordability checks. If successful, an agreement in principle can be issued.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Can I Still Obtain a Mortgage for a Barn Conversion with Bad Credit?

Unfortunately, poor credit scores will impact the chances of any mortgage application being accepted. If a lender is willing to make a mortgage offer, the terms could be disappointing including high-interest rates.

Should you find yourself in the position of needing a development loan however you have a poor credit history, please feel free to contact our friendly team who will explore all of the options available.

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What are the Advantages of Development Finance?

One of the main benefits of opting for development finance is that this type of borrowing can enable access to a higher level of finance than traditional borrowing methods.

Developers can usually borrow up to 100% of the build costs, providing that the total value is within 60-70% of the gross development value. However, as with most lending, the actual figures offered to an applicant may vary depending on their personal circumstances and the details of the project itself.

As already mentioned, with development finance the monies are realised in stages allowing the borrower to draw down upon the finance as needed throughout the project. This enables the borrower to keep the costs of borrowing down as interest is only charged when monies are drawn.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What are the costs involved with Development Finance?

There are various costs applicable to borrowing via development finance, however, these will vary between lenders. Typically, the costs incurred could involve;

• Arrangement fees – These are fees that are calculated as a percentage of the total value of the loan.
• Interest – Interest can be charged on a monthly or annual basis, however, in comparison with standard mortgages, the interest rates are higher due to the short-term nature of development finance. Although, as already discussed, the flexible way that interest is charged is likely to be more cost-effective compared to other methods of borrowing.
• Exit fees – Exit fees can be payable on repayment of the loan. This type of fee can be calculated in different ways, either as a percentage of the value of the monies borrowed, or the total value of the project.
• Broker fees – Broker fees may be applicable if a broker is used, however, the fees will usually vary between companies.

It is always worth checking the fees applicable and other terms of lending before committing to an offer.

Again, the use of a specialised broker could be a lifeline in providing assistance with the comparison of offers between lenders and proof-reading the small print of any offer, ensuring that there are no hidden fees.

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Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

How is development finance repaid?

Development finance loans are often repaid by two methods, either the sale of the property or by refinancing.

Are barn conversions difficult to sell on?

The demand for converted barn properties will vary between locations within the country and over time, however, a mortgage advisor or estate agent could provide recent sale statistics to reassure you should you be exploring the conversion of a barn using finance to fund the project.

Commonly a development property would sell quicker and easier if:

• The development has been carried out to a high standard
• Modern technology and heating sources have been input into the property during the development

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Mortgage for Barn Conversions Summary

Development finance for barn conversions can be a highly attractive form of short-term, cost-effective borrowing due to the flexibility offered.

However, each situation would be individual depending on the circumstances of the borrower, and therefore other financing options may be worth exploring.

The use of a specialised broker is highly recommended to advise all of the options available for each and every scenario as well as ensuring that the chosen financial product is the most competitive available and that all terms are fully understood.

Please feel free to get in touch with our friendly team of advisors to book an initial consultation to discuss the options available to you.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Can you have two mortgages? What are the legalities?

This is a common scenario if someone has a personal mortgage and wants a second for an investment or second property.

In this guide, we will discuss a range of reasons why a person would opt for multiple mortgages, the rules regarding taking on more than one mortgage and the financial options available for additional borrowing.

How many mortgages can I have?

In the UK there are no laws restricting a person from taking on multiple mortgages, however individual lending criteria may cause some hurdles, following obtaining the first few mortgages!

Typically, a borrower would have an initial residential mortgage for their own family property, and then any additional mortgages would be on a buy to let basis.

However, there is nothing stopping an individual or couple from obtaining multiple residential mortgages, although proof that the borrower is intending on residing in both properties would be needed.

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More often than not, the buy to let route is used where the borrower would seek to rent out the subsequent properties, acting as a landlord and build a property portfolio.

Upon each mortgage application, an applicant would need to fulfil the lending criteria on its own merit, including passing affordability and credit checks.

Income would need to be proven to ensure that as each subsequent loan is requested, that the monthly repayments can be made.

Therefore, each time an additional mortgage application is made, the monthly commitments accumulate for the borrower and consequently it is rare for anyone to have more than four mortgages at any one time!

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Types of Mortgages

As we have already briefly discussed, there are two types of a mortgage; a residential mortgage and a business type mortgage product such as a buy to let mortgage. Let’s explore the differences between the two mortgage types.

What is a Residential Mortgage?

A residential or standard mortgage is the most common type of secured mortgage product and enables individuals or couples to take out a long-term loan for the purpose of purchasing a property to live in.

Typically, a residential mortgage would require the applicant to have a cash deposit of between 10 and 30% of the property value.

Monthly repayments are made against the loan for the duration of the mortgage term, which is typically around 25 years.

There are two types of standard mortgage repayment methods; full repayments which combine repaying the capital loan and the interest due, or interest only which results in lower monthly repayments however the mortgage capital does not get repaid.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

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Interest is applicable against the money owed and often charged as an annual percentage, in a range of methods as follows:

• Fixed-rate – Provides a fixed monthly repayment each month by securing the interest rate linked to the mortgage for a set period of time, often between 2 and 5 years.
• Standard variable rate – This is a long-term interest rate, often applied after a fixed rate ends or following an introductory offer. The interest rate fluctuates each month at a rate set by the lender and therefore will vary the mortgage repayment due.
• Tracker – A tracker rate follows the Bank of England base rate at a set percentage higher and will vary from month to month.

A property can be let out with a standard mortgage still outstanding however permission would usually need to be sought from the mortgage lender. However, it is more common for the mortgage type to be changed from a standard mortgage to a buy to let mortgage when renting out a property.

What is a Buy to Let Mortgage?

A buy to let mortgage is a financial mortgage product that is specifically for the purpose of renting out a property, and not living within it.

Buy to let mortgages commonly require higher deposits levels than standard mortgages, of between 25% and 40% loan to value rate.

In addition, buy to let mortgages can sometimes have higher interest rates attributed to them compared with standard residential mortgages, plus there are often arrangement fees due of up to 3.5% of the property’s value to consider as well.

Similar to standard mortgages, there are two options regarding the monthly repayments; full payments and interest only.

Most landlords seek interest-only mortgages, to keep the monthly repayments down, leaving the capital balance payable at the end of the mortgage term when landlords would either re-mortgage or sell the property to repay the capital.

Interest-only mortgages carry higher risks for the lender and therefore will usually have higher interest rates.

What is a Bridging Loan?

Another way of obtaining multiple borrowings is the use of a bridging loan.

A bridging loan is a method of short term secured finance that can fund a property purchase whilst the sale of other assets is still in progress.

A bridging loan can facilitate a property transaction without delay by applying owned equity within a current property as a deposit towards another property. The result of which is that the mortgage holder owns multiple properties while further transactions are proceeding.

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Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What other considerations are there for landlords?

If the purpose of the additional borrowing is to become a landlord and rent out properties, there are lots of things to consider in addition to the type of mortgage, this includes:

• Insurances
• Maintenance costs of the property
• Legal responsibilities of being a landlord such as energy efficiency of the property
• Health and safety responsibilities
• Ensuring you comply with legislation such as the Tenant Fees Act and Tenancy Deposit Schemes

Becoming a landlord is a big decision and therefore sufficient research and consideration of all of the factors including legislation and costs should be undertaken.

Can you have Two Mortgages Summary

As we have seen, it is possible to obtain multiple mortgages, however, the purpose behind the additional borrowing usually dictates the type of finance needed

Our specialised team can assist with advising the most appropriate borrowing method for your specific requirements as well as provide guidance in relation to becoming a landlord. Book an appointment to speak to a member of our friendly team today!

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Proof of deposit for a mortgage is an essential part of the application process and commonly a deposit of between 10 and 30% of the property value is needed to obtain a mortgage.

Most prospective borrowers believe that deposits must be funded solely by personal savings, but this is not the case, although the source of the deposit will need to be proven to the lender during the mortgage application process.

In this guide, we will explore the acceptable sources of mortgage deposits and the method of proving the source of the money and the reasons why this step is undertaken.

Why must a mortgage applicant prove where a deposit comes from?

Anti-money laundering or AML regulations came into force in 2017, with the aim of stopping criminals using professional services to launder money within the UK.

UK law stipulates that prospective mortgage applicants must provide proof of identity, proof of address and to provide details of the source of the deposit to comply with anti-money laundering regulations.

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Both lenders and solicitors’ must adhere to the regulations and assess the risks of the source of funds being from legitimate legal sources, and therefore mortgage applicants are asked to provide sufficient evidence of the source of funds.

Evidence can include bank account statements for savings accounts or signed contractual agreements depending on the method of obtaining a deposit.

Lenders will have criteria stipulating the approved sources, and should an application not meet the requirements, an application would be declined.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What are the approved mortgage deposit sources within the UK?

Each lender will set their own criteria regarding acceptable sources of deposits and therefore it is always worth checking the requirements before making a mortgage application.

However, there are some universally accepted deposits within the UK and these include the following:

Personal savings

Mortgage lenders are always willing to accept deposits funded by the applicant’s personal savings however they may seek proof that the savings balance has grown over time, which can usually be provided by submitting saving account bank statements.

The sale of property

Similarly, proceeds from a sale of property that was previously owned by the applicant are also widely accepted as sources of deposits with mortgage lenders. The proof of the sale of the property can usually be provided by legal documents and bank statements showing the sale transaction.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Find a Mortgage

Equity released from another property

Should an applicant be in the position to own a second home, for example, equity could be released to act as the deposit on another mortgage?

This is often proven via property valuations being undertaken and specific mortgage products may be required should a property already be owned.

Inheritance

Inheriting money via a will is a common source of deposit and therefore is widely accepted. The proof of the source of funds is usually obtained via a signed document from the executor of the will, along with bank accounts showing the inherited money entering the applicant’s account.

The following sources of a deposit may be accepted by some lenders, however other lenders may not and therefore it is worth checking before making a mortgage application.

Sale of assets

The sale of assets other than property, such as cars, boats, works of art, coins or other valuable memorabilia that have been legally sold could be an acceptable source of funds for a deposit, however, it would depend on the lender.

Gifts

A gifted cash deposit can be an acceptable source of funds for certain lenders however often it would depend on who provided the gift.

If the gift was provided by immediate close family most lenders may accept this, however, a gift from a more distant family member, or family that are not blood-related could problematic.

The proof of a gift could be a signed legal agreement documenting the parties involved and the value of the gift. Meanwhile, gifts from friends are even less likely to be accepted as an approved deposit with lenders.

Gambling winnings

Funds received from gambling winnings are sometimes accepted by certain lenders, however, the level of funds and the frequency of gambling may be a concern for mortgage lenders.

In addition, income from gambling is not deemed an approved source of income and therefore any such income would likely be removed from an application, which could impact passing the lender’s affordability checks.

However, if a one-off large sum of money has been won, for example, a lottery win, some mortgage lenders will accept this with proof of where the money was won and the total value. Cash winnings are therefore more difficult to trace and could raise warnings to mortgage lenders.

Oversea savings

Lenders are likely to be nervous in relation to savings held overseas as the sources of which can be difficult to trace, and therefore this may restrict the number of lenders willing to accept a mortgage deposit financed in this way. One approach may be to utilise a worldwide respected and established bank so that the finances can be legally traced.

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Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What mortgage deposit sources are not acceptable within the UK?

There are a number of financial sources that are not deemed acceptable with mortgage lenders as follows:

Unsecured borrowing

Most lenders will not accept a mortgage application with lending as the source of a deposit as this will impact the affordability of the applicant as both the mortgage and the deposit borrowing would need to be repaid each month, increasing the risks to the lender of a defaulted mortgage.

Cash

Due to traceability concerns, a cash deposit is not acceptable with most mortgage lenders. Most professional services will not take cash as a payment method due to the concerns of money laundering and therefore if you have obtained a large amount of cash it would be best to seek legal advice regarding the options available before applying for a mortgage.

Proof of Deposit for a Mortgage

We have explored the reasons why the sources of funds are tracked, as well as discussing acceptable common sources of mortgage deposits.

Should you have any queries regarding your personal financial situation including the eligibility of a deposit, please get in touch with our friendly team for further independent financial advice.

Call us today on 03330 90 60 30 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

How much do I need to earn to get a mortgage of £250,000? And what should you expect the repayment terms to be?

Property prices have fluctuated over recent years however the overall trend tends to be a positive increase.

Higher house prices may be the result of the supply and demand of available property within an area, the reputation of an area improving or local investments resulting in an increase in amenities.

All of which in turn often results in higher value mortgages being required for potential buyers.

In this guide, we will explore the higher lending options available on the financial market including mortgages for £250,000 and above, as well as the application criteria and the process of how to access the financial products.

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How much do I need to earn to get a £250,000 mortgage?

Like other financial product applications, there are borrowing criteria set by each lender.

The mortgage application and underwriting process are the same for higher value mortgages as it is with other mortgages, however, lenders may wish to undertake further due diligence and checks due to the increased level of risk involved.

How much you’ll be able to borrow is dependant on a variety of factors, which include:

• Source of income
• Loan-to-income ratio
• Loan-to-value ratio
• Affordability
• Credit history
• Age

Source of Income

An applicant’s income level as well as the consistency of income will need to be reviewed by a potential lender.

Proof of income will be required to be submitted via documentation such as payslips and P60s.

Lenders will often be keen to accept mortgages applied for by professionals who are deemed to be high earning and in secure roles.

In addition, mortgage lenders will look favourably at applicants who are in permanent employment as opposed to a temporary contract and therefore this is worth considering ahead of making an application.

This means that if you are self-employed or on a temporary contract you may have more difficulty, especially with traditional high street lenders.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

loan-to-income ratio 

The loan-to-income ratio is the total size of your mortgage loan vs your annual income. At present, the maximum amount you can borrow is around 4 times your annual income. However, in some cases, they may offer more or in other cases less than this amount.

Having this figure in mind can be helpful, but lenders typically use other factors to judge your application too, for example, the loan-to-value ratio and your affordability.

loan-to-value ratio 

The loan to value ratio is basically the size of your mortgage balanced against the value of the property you want to purchase. This term is often explained as a percentage.

For example: If your mortgage was £100,00 against a £125,000 house or property then the LTV ratio is 80%. The remaining £25,000 is made up by the deposit.

Typically, lenders will be ok offering around 80% mortgages, therefore, if you have enough deposit to cover around 20% of the property cost, you should be able to borrow up to 4.5 times your annual income.

However, other factors are still considered, including affordability.

Affordability 

The lender will want to know you can truly afford your repayments, even when major changes occur, such as inflation of bills and interest rate rises.

As a result, lenders will assess your current expenses and outgoings to determine your affordability.

It’s a wise idea to reduce your non-essential spending months ahead of making a mortgage application. This is probably the case anyway if you have been saving a deposit.

Also, see how much you can reduce your essential spending – for example, try doing your shopping at cheaper places.

If you can demonstrate that you can easily cover your monthly outgoings and make your mortgage payments you should be able to borrow the amount you want.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Other factors that affect getting a £250,000 mortgage 

Here are some other common factors that are considered when determining whether you can borrow a mortgage of 4.5 times your annual income or not:

• Monthly Expenditure – An applicant’s typical monthly expenditure will also be analysed during the process of reviewing a mortgage application through the submission of bank statements. This process is to ensure that affordability checks can be undertaken, ensuring that the mortgage repayments are manageable. It is worth noting that certain types of transactions can raise alarm with potential lenders such as debt repayments to multiple credit cards or store accounts, as well as gambling payments.
• The size of the deposit – The value of the deposit to be put down against the total property cost will calculate the loan to value percentage of the mortgage application. Lenders will consider applicants with a higher deposit as more favourable as this will reduce the risks of lending.
• An applicant’s financial history and current credit score – The applicant’s credit history will impact the outcome of a mortgage application as well as the current credit score. Bankruptcy, CCJ’s or missed loan repayments will severely impact a credit score for many years and therefore should there be any concerns regarding your history of managing your personal finances, it would be worth discussing matters with a mortgage advisor ahead of an application.
• The property details – The property’s value and condition will be assessed during the mortgage application process via a property valuation. There are some types of properties that lenders will not provide finance for and therefore if there are any concerns regarding the condition of the property, it would be worth investigating these before progressing with an application.
• The type of mortgage desired – There are an array of mortgage options available on the market and therefore ahead of an application it would be worth researching what would be most suitable. A mortgage advisor can assist you with this.

What are the income levels required to obtain a 250,000 mortgage?

This can vary from lender to lender as lending criteria and income multiples can vary, but as mentioned previously typically, lenders will be ok offering around 80% mortgages, therefore, if you have enough deposit to cover around 20% of the property cost, you should be able to borrow up to 4.5 times your annual income.

In certain circumstances, a mortgage advisor may be able to access higher Loan to Income mortgages. Therefore, should your income not meet the current set multipliers resulting in the mortgage value needed, it maybe be beneficial to approach a specialist mortgage advisor.

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What will a 250k mortgage cost me? 

The cost of your mortgage repayments will vary depending on a variety of factors including the interest rate, your repayment period and the amount of deposit provided.

What kind of mortgages are available? 

A fixed-rate mortgage means that your repayments will be the same for the entire term e.g. 2 to 5 years typically.

If you are on a variable rate mortgage then your interest rate may change.

How long will the mortgage period be? 

The most common repayment period is 25 years, but it’s possible to secure a longer or shorter repayment term.

A longer repayment term usually translates to lower monthly repayments, since it means you have a longer period of time to pay back the loan. That also means you will be paying back a greater amount in total.

Can I obtain a £250,000 mortgage with a deposit of 5%?

Although a higher value mortgage with a low deposit may be harder to find on the open financial market, there will be a handful of lenders that will be willing to consider lending at 95% of the property value, or loan to value rate.

In such situations, it would be highly recommended that a mortgage advisor is approached to assist with finding appropriate lenders as well as seeking the most favourable mortgage terms.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Can I get a mortgage for £250,000 summary

Higher value mortgages i.e. a 250,000 mortgage are more common these days due to the increases seen within property prices over recent years. As discussed, there are strict criteria that will need to be met before a lender would agree to offer high-value mortgages.

As with any financial decision, it is highly recommended to seek mortgage advice before making a commitment, ensuring that all terms and conditions are fully understood.

Independent advisors will also have access to the whole of the market, rather than just high street lenders and therefore will often be able to compare a wide range of options across an array of lenders.

It is worth noting that all secured lending will have consequences to owned assets if the repayments are not kept up. These include, but are not limited to, an impact on a person’s credit score and in worst cases, repossession.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Can you get a mortgage on a mobile home or caravan?

Unfortunately not, but it’s not all bad news, as there are other means of financing the purchase of a new mobile home.

Traditional mortgages are not suitable for every property type including mobile homes and therefore specific home loans will be needed.

Mobile homes are very appealing for many and therefore different financing options are available for this market of home buyers.

In this guide, we will be exploring the world of mobile homes including the residency rules and financing options.

What is the definition of a Mobile Home?

Mobile homes or static homes is a prefabricated structure that has been built or redesigned for human residence purposes and can be moved between locations.

The nature of mobile homes enables them to be flexible uses, either placed in situ for emergency purposes, or for temporary or permanent housing needs.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What are the Residency Rules of Mobile Homes?

There are an array of residency rules in relation to mobile homes, some of which are localised as are set by local councils. Most councils do not allow the permanent residency of mobile homes, and therefore typically, holiday park sites are closed for a least six weeks every winter, therefore preventing owners to inhabit their mobile homes all year round. This rule can vary between local authorities though and therefore it is worth double-checking should you be interested in purchasing a mobile home.

For access all year round, it is likely that the mobile home will need to be located either on land that is owned, with any permission requirements requested from the local council.

Some circumstances where a local council may grant permission for a mobile home (which meets the legal definition of a caravan in size and construction format) to be resided in on private land are as follows:

• Where the mobile home will be located on a drive or garden.
• Where the occupant of the mobile home is also permitted to occupy the house on the land, for example, the mobile home is not let out separately as a private residence.

An exception to these rules is if a homeowner is undertaking a self-build project and therefore wishes to live in a caravan on their land during the building project.

How much do Mobile Homes Cost?

Like properties made from bricks and mortar; the prices range of mobile homes dependant on the size, condition and age of the home. Typically, mobile homes are drastically cheaper than in traditional homes.

As traditional mortgages cannot be obtained on mobile homes, one benefit is that the purchase costs are cheaper than a traditional property as valuations and solicitor fees are unlikely to be necessary. In addition, property tax is generally not payable when purchasing a mobile home.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What are the Positives and Negatives of Owning a Mobile Home?

Choosing to purchase a mobile home may be something that you’ve been pondering for a while, however, as with any large financial decision, there are many factors to consider. Here are a few of the positives and negatives of owning a mobile home:

Positives:

• Owning a mobile home can provide a community-based life experience, especially if a park site is chosen. Park site-based living may also include community experiences on-site such as pools, fitness centres and event schedules.
• The costs of obtaining a mobile home property are generally significantly cheaper than owning a traditional bricks-built home.
• Depending on the type of mobile home, there may be opportunities to move the home to a new location as required. The freedom to move is a highly desirable element of mobile home life!
• Typically, the running costs of a mobile home can be significantly cheaper than other property types. However, the energy costs do vary depending on the type of energy installed into the mobile home.
• Maintenance costs can be cheaper for mobile homes compared with brick-built homes due to the size and nature of the property. In addition, the plot sizes tend to be smaller and therefore garden maintenance can also be lower.
• Site locations can offer the costs of amenities combined into the land rental fees such as water, refuse and recycling. This can streamline expenses and keep running costs down.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Negatives:

• Although traditional property prices fluctuate, the overall trend tends to be positive, whereas the value of a mobile home depreciates over time. This is important to note especially if considering purchasing a mobile home as an investment.
• The living space can be fairly small in mobile homes and therefore the transition from a larger property can sometimes be a challenge.
• Financing options to purchase a mobile home can be reduced, however are still possible.
• Depending on the site location, there can be changes in ownership which can impact the conditions of living there. This scenario can often happen with park sites should an owner sell up for example.
• Selling a mobile home can be more challenging than selling a traditional home.

Other Considerations:

• As briefly mentioned, the location of where the mobile home will be situated is key for financial, residency and lifestyle purposes. If park living is preferred, be aware that some parks may have age restrictions to reside on-site.

Can Mortgages be Obtained for Mobile Homes on Park Sites?

Mortgages are not available on park homes due to land registry issues. Typically standard mortgages are applicable against the land that a property has been built upon, however with park homes, they are very rarely registered with the UK land Registry, and are therefore not applicable as the park owner owns the land whereas the mobile homeowners lease the plot of land to locate their home.

Land Mortgages

As discussed above, the concern for mortgage lenders is due to the land registry. If the land that you are wishing to locate a mobile home on is available to purchase, a land mortgage may be the solution.

There are many lenders that can provide a mortgage on land, however, the number may be reduced for the purpose of residing in a mobile home on site. Should you find yourself in this scenario, please get in touch with our amazing team who can provide assistance with sourcing land mortgages.

Mobile home mortgages and loans summary

Mobile home living can provide a community lifestyle, reduced living costs and freedom to relocate, however, there are considerations to review such as the financing options and other expenses such as fees payable to the site.

Should you be considering the purchase of a mobile home and require finance please do get in touch to enable us to source some suitable options.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Can you get a mortgage on a mobile home or static caravan in the UK?

Unfortunately not, but it’s not all bad news, as there are other means of financing the purchase of a new mobile home.

Traditional mortgages are not suitable for every property type including mobile homes and therefore specific home loans will be needed.

Mobile homes are very appealing for many and therefore different financing options are available for this market of home buyers.

In this guide, we will be exploring the world of mobile homes including the residency rules and financing options.

What is the definition of a Mobile Home?

Mobile homes or static homes is a prefabricated structure that has been built or redesigned for human residence purposes and can be moved between locations.

The nature of mobile homes enables them to be flexible uses, either placed in situ for emergency purposes, or for temporary or permanent housing needs.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

What are the Residency Rules of Mobile Homes?

There are an array of residency rules in relation to mobile homes, some of which are localised as are set by local councils.

Most councils do not allow the permanent residency of mobile homes, and therefore typically, holiday park sites are closed for a least six weeks every winter, therefore preventing owners to inhabit their mobile homes all year round.

This rule can vary between local authorities though and therefore it is worth double-checking should you be interested in purchasing a mobile home.

For access all year round, it is likely that the mobile home will need to be located either on land that is owned, with any permission requirements requested from the local council.

Some circumstances where a local council may grant permission for a mobile home (which meets the legal definition of a caravan in size and construction format) to be resided in on private land are as follows:

• Where the mobile home will be located on a drive or garden.
• Where the occupant of the mobile home is also permitted to occupy the house on the land, for example, the mobile home is not let out separately as a private residence.

An exception to these rules is if a homeowner is undertaking a self-build project and therefore wishes to live in a caravan on their land during the building project.

How much do Mobile Homes Cost?

Like properties made from bricks and mortar; the prices range of mobile homes dependant on the size, condition and age of the home. Typically, mobile homes are drastically cheaper than in traditional homes.

As traditional mortgages cannot be obtained on mobile homes, one benefit is that the purchase costs are cheaper than a traditional property as valuations and solicitor fees are unlikely to be necessary.

In addition, property tax is generally not payable when purchasing a mobile home.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What are the Positives and Negatives of Owning a Mobile Home?

Choosing to purchase a mobile home may be something that you’ve been pondering for a while, however, as with any large financial decision, there are many factors to consider.

Here are a few of the positives and negatives of owning a mobile home:

Positives:

• Owning a mobile home can provide a community-based life experience, especially if a park site is chosen. Park site-based living may also include community experiences on-site such as pools, fitness centres and event schedules.
• The costs of obtaining a mobile home property are generally significantly cheaper than owning a traditional bricks-built home.
• Depending on the type of mobile home, there may be opportunities to move the home to a new location as required. The freedom to move is a highly desirable element of mobile home life!
• Typically, the running costs of a mobile home can be significantly cheaper than other property types. However, the energy costs do vary depending on the type of energy installed into the mobile home.
• Maintenance costs can be cheaper for mobile homes compared with brick-built homes due to the size and nature of the property. In addition, the plot sizes tend to be smaller and therefore garden maintenance can also be lower.
• Site locations can offer the costs of amenities combined into the land rental fees such as water, refuse and recycling. This can streamline expenses and keep running costs down.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Negatives:

• Although traditional property prices fluctuate, the overall trend tends to be positive, whereas the value of a mobile home depreciates over time. This is important to note especially if considering purchasing a mobile home as an investment.
• The living space can be fairly small in mobile homes and therefore the transition from a larger property can sometimes be a challenge.
• Financing options to purchase a mobile home can be reduced, however are still possible.
• Depending on the site location, there can be changes in ownership which can impact the conditions of living there. This scenario can often happen with park sites should an owner sell up for example.
• Selling a mobile home can be more challenging than selling a traditional home.

Other Considerations:

• As briefly mentioned, the location of where the mobile home will be situated is key for financial, residency and lifestyle purposes. If park living is preferred, be aware that some parks may have age restrictions to reside on-site.

Can Mortgages be Obtained for Mobile Homes on Park Sites?

Mortgages are not available on park homes due to land registry issues. Typically standard mortgages are applicable against the land that a property has been built upon.

However with park homes, they are very rarely registered with the UK land Registry, and are therefore not applicable as the park owner owns the land whereas the mobile homeowners lease the plot of land to locate their home.

Land Mortgages

As discussed above, the concern for mortgage lenders is due to the land registry. If the land that you are wishing to locate a mobile home on is available to purchase, a land mortgage may be the solution.

There are many lenders that can provide a mortgage on land, however, the number may be reduced for the purpose of residing in a mobile home on site.

Should you find yourself in this scenario, please get in touch with our amazing team who can provide assistance with sourcing land mortgages.

Mobile home mortgages and loans summary

Mobile home living can provide a community lifestyle, reduced living costs and freedom to relocate, however, there are considerations to review such as the financing options and other expenses such as fees payable to the site.

Should you be considering the purchase of a mobile home and require finance please do get in touch to enable us to source some suitable options.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts