Modular homes are homes that are built offsite and are physically fitted together on site of your choice. Often called as prefabricated home, their popularity is on the rise because they are cheaper, faster and customised. While they may not be built from ground up with foundation, they can be constructed to withstand high weather impacts.
In financial terms, they have similar rates of home loans, insurance premiums and taxes as site-built homes. And conveyancing of these home are performed similar to regularly built properties. As modular homes can be highly customised as per your need, there is much consideration you have to make. Financing your modular home is one of the first step in the process. These steps will help financing modular homes.
The first step is to calculate how much money you are going to spend on your modular home. These estimates are required to get approval from the bank for the loans. They will assess your calculations and let you how much they can lend you with the interest rates for the amount.
As you are financing your home, it is recommended to check a few banks to see what their interest rates are like. You will need to search for a bank with interest rate you are comfortable with. The small difference in the rates can amount to huge sums of savings in mortgage payments.
After you have chosen the land where your home is going to be built and a particular modular home plan. You will need to apply for the loan with the bank of your choice. Several verification checks are done to check the cover for the fees like credit check, proposed contract of the modular home of your choice, recent loan statements and other details.
If the application process goes smoothly, you will be sent a letter of commitment from the bank. You can now show the letter to the modular home manufacturer or the landowner to let you buy the property and home. The commitment letter will contain conditions and restrictions you need to comply with. You may need to provide blueprints, and costs estimate before the loan can be closed.
As your mortgage loan is approved, you need to schedule the amount you have to pay during the construction of your home. These include clearing of the land, the building of the foundation, the arrival of the modules to the site, and finishing the construction. As every milestone completes successfully, you have to make sure the vendors are paid. If everything checks out, the bank issues a check which you can use to pay the contractor.
You will now show the disbursement schedule and clear other concerns from the bank like building permits. This will conclude the bank to sign the final documents approving your mortgage loan. You will need to pay for the closing costs involving lawyer fees and title fees. You will need to pay Construction loan payments and then permanent mortgage loan payments after the construction completes.
Finally, with all documents settled, the manufacturer can start building your modular home. For every milestone reached, you will need to pay out vendors as per the disbursement schedule. You will also have to start making payments to the bank for the amount which has been disbursed. So the fees will increase as it progresses. If the construction time is condensed to 2-3 months, you will minimise the construction loan payments to the bank.
When the construction completes, the bank assesses the house. After satisfactory inspection, the loan is turned into a permanent mortgage. As per your mortgage agreement, you will have to continue paying the payment for the interest and principal. You will need to pay transfer fees during the process.
This is how financing modular homes is done in the United Kingdom. You will have your perfect home for your family in the shortest time possible without the long wait and mess you have to deal with on-site home builds.