First time buyers are under more pressure and financial strain than ever before. The age at which those in the UK are able to afford a deposit on a property or commit to a mortgage is increasing. Further, according to a recent article published via the This is Money website, first time buyers are, unlike their parents, now facing paying their mortgages over a staggering forty years in comparison to the average twenty-five year mortgage which their parents took out. This can cost home buyers an extra £63,000.
Then, it is no wonder many first time buyers are struggling to find a way to get on the property ladder. Fortunately, there are alternatives to trying to save whilst affording skyrocketing rent prices in 2016. One of those solutions which is proving increasingly popular is to consider purchasing a park home property as an alternative to a traditional bricks and mortar dwelling, but could a park home make the perfect property for a first time buyer?
To answer that question, let’s take a look at three of the major differences between buying a bricks and mortar property vs. a park home and what they could translate to mean financially and in terms of lifestyle and living.
Buying Mortgage Free?
One of the first and major realities that initially draw so many first time buyers to at least consider making a park home a first home is the simple fact that park homes are bought and sold without the need of a mortgage.
Because park homes are bought and sold independently of the land upon which they stand, it is not possible to mortgage a park home property as traditional mortgages are secured against the land upon which a building resides and not the building itself. Park homes are a cost effective and money saving alternative to a bricks and mortar home for exactly this reason; much of the value of a bricks and mortar property is actually derived from the perceived the value of the land upon which it sits. This permits people to buy and rebuild on land, potentially even knocking down the current property that is built there altogether.
Meanwhile, those buying a park home most often lease or rent the land upon which it is situated. This means that a park home could very realistically prove a far more financially viable means of buying a first time home, especially as even those who cannot afford to buy a park home out-right can still secure finance; independent finance companies typically offer loans covering up to 70% of the purchase price of a park home bought within the UK.
For more finance options when purchasing a park home, visit the Sell My Park Home website and give their blog article: How to Finance a Park Home: Your Options a read. Further, you might want to take a look at their other blog articles whilst there; the Sell My Park Home blog is brimful with up to date information and advice which is all well worth taking a look at, from the perks of park home living to explanations about park home site fees and lease reviews.
Escape Stamp Duty
Stamp Duty is a form of land tax affixed to bricks and mortar properties in the UK. In summary, if you purchase or intend to purchase a property within the UK with a value and purchase price which hits or exceeds £125,000 in value you will be required to also pay stamp duty land tax.
Further, and to add to the bad news for first time buyers, because the rules, laws and regulations surrounding stamp duty land tax within the UK are so complex, unless you are yourself a lawyer or agent who specialises in property law, you will almost certainly need to fork out for the services of one who does in order to ensure you pay the correct amount. Hence, even those who have saved long and hard to get together a deposit on a first time home and think they can keep up with a mortgage may subsequently find themselves unable to afford, on top of those costs, to pay the necessary stamp duty. First time buyers can also find that their search for that perfect home ends up shrinking in choice down to properties which are not deemed valuable enough to be subject to stamp duty tax.
Then, the great news for those who opt to purchase a park home is that park home properties are exempt from stamp duty. Just as mortgages cannot be applied to park homes because park homes are bought and sold independently of the land upon which they sit, so too is it the case that stamp duty cannot be applied – despite how valuable a park home property might be, or its size.
Avoid Years of Renting
According to an article published recently in the Guardian newspaper, the average Brit spends a massive £52,900 on rent before being in a position to make that first time property purchase. Further, those living in London can expect to part with even more, spending on average £68,300 before buying their first property. Take a moment to think about what that amount of money equates to and it is no wonder if the average person is spending over half of £100,000 on rent whilst saving to buy for the first time, it takes so long to afford to buy, or that the average age of the first time buyer is rising year on year.
In contrast, those who save to purchase a park home or even move into one which can be paid for via finance whilst living within it stand to save themselves the 22% of annual income spent on average to live somewhere whilst saving to buy themselves somewhere to call home. Thinking about it in those terms is sure to persuade even the least enthusiastic about buying a park home pause for though. This is especially true when the reality can mean that those who turn their nose up at the park home lifestyle are left to scrimp, save and put their lives and dreams on hold to afford to live them ‘one day’ whilst those who are open to making a park home their home are busy enjoying the fact their dreams have already come true.