Financing mobile homes on owned land, while often possible, can present its own unique challenges.
While not overly common in major city centres, mobile homes on land are much more prevalent outside of city limits and in small towns. In these cases, the borrower owns both the mobile home and the land that it occupies.
There are a couple of considerations to keep in mind when working with one of these deals.
First, depending on the province that you reside in, the rules regarding how the mobile home is viewed on the land can vary, legally speaking. Some provinces see the home as a chattel, while others will view it as a fixture. While legally different, there are ways to finance in both cases.
Another consideration to note is the age of the mobile home. Mobile homes tend to depreciate faster than traditional stick-built homes. As such, their economic life is usually shorter. You may see lenders put more emphasis on the value of the land if the home is older.
The lender may also want the appraisal to show how the home is affixed to the land. We’ve seen some questionable ‘engineering’ used to support the home. This can often detract from the value that can be put on the home. Ideally, the lender wants to see concrete piles, or steel screw piles used to support the mobile home. Alternatively, blocking and tie-downs that meet building codes are desirable.
Also, many of these mobile homes have additions built on to them. Lenders will usually insist that there be evidence that any and all additions were done with permits and inspections. This is especially true for any electrical work that was done.
There’s no question that financing a mobile home is a little different than financing a traditionally built home. But for the most part, mobile homes on owned land are financeable.