Here our long standing park manageress Judy Weight with 27 years experience answers some typical questions regarding finance.
We don’t have enough spare cash to buy a holiday home out-right, what finance options are open to me or am I best to mortgage?
Quite simply; No. Traditional mortgages are not generally available for this sort of purchase. If you have adequate security, for example your own house, then you may be able to get a bank loan for this purpose.
Saying that the most common ways of borrowing the cash is through a finance company, which can be done either through a caravan holiday home park like us, a caravan holiday home distributor or through a finance house.
What size loan is available to me?
Well that depends on a few variables, your credit rating, chosen holiday home price and which finance company you approach. Most set their minimum figures at £5,000 and lend up to 75-90% of the purchase price, alongside a cash deposit.
Is the interest rate fixed or variable?
It can be either, again depending on the finance company you approach and the loan you take out. With fixed rate loans the interest rate stays the same throughout the whole term of the agreement and it has the peace of mind of knowing that the repayments won’t go up. With a variable interest rate loan the rate is linked to the finance house base rate meaning that the number of repayments could go up or down as appropriate. The advantage here is that you can make lump sum repayments or pay off the loan in full at any time after the first 12 months. In either case it is important to shop around and most importantly, check the small print.
Is sub-letting a holiday home a good idea?
It can help cover some of the costs of owning a holiday home, but it is unlikely to net you a profit. If you do decide to sub-let you will get the best return by doing the administration, cleaning and maintenance yourself. Remember to make sure your chosen park allows sub letting and above all only sublet to people you know, for the sake of hiring your caravan out for a £100 a weekend, finding your holiday home wreaked makes the whole exercise pointless.
What else do I need to know about sub-letting?
Well firstly if your chosen park allows it. A lot of parks, like ourselves, do not allow sub letting for the simple fact that people who hire out a caravan just for a weekend at a time do not look after or respect the facilities or the wishes of other residents, and are more prone to breaking rules and being noisy in the late and early hours of the night. Parks that do allow it may charge them for using their facilities. You will need lots of good publicity (use a website) booking forms and effective financial control. Yearly gas and electrical tests are obituary and your caravan will have to be cleaned to a high standard after each visit. A clear cut policy (for example whether or not pet’s are allowed) and terms and conditions may be required. You’ll have to inform your caravan insurer and you may find your insurance premiums come at a higher price.