Tuesday, 29 December 2015

Mobile & Modular Homes

Mobile and modular homes make up a large and steadily growing part of the housing market in Canada. In fact, these pre-fabricated homes made up more than 15% of the new housing created in 2014. That's too large a segment of the market to ignore!

With that in mind, I wanted to give some insight into the benefits and challenges of considering this type of real estate for your next home or investment property. Dollar for dollar, homes which are manufactured off-site may offer greater value for your investment. They can be custom-built to your specifications if desired, and then moved into place and installed at a site of your choosing. If you opt for a mobile home, you may even have the option of moving that home elsewhere later on if you desire. It is for this very reason that these types of properties can be more of a challenge to finance and there are some special considerations.

Due to the risk associated with these types of homes being anything less than permanent(remember, lenders hate risks!), you may expect some challenges when trying to obtain a mortgage. There are consistently fewer lenders who will accept these properties, and some who may charge a premium rate depending on the details. Pre-approvals can pose a challenge as well due to uncontrollables such as pad rent and/or strata fees varying widely from one property to the next. As you can imagine, a mobile or modular on it's own land will be treated differently from one in a park or strata-type community. It's important to have a Mortgage Broker you know and trust to help you navigate this decision.

Some important questions to as are:
  • Does this purchase include freehold land(define Freehold HERE), or is the land leased?
  • What type of foundation is the home on? Is it a concrete pad? Concrete crawlspace/basement? Wooden piers? Steel pilings? 
  • How is the home secured to this particular foundation?
  • Finally, is it truly a "Mobile" or a "Modular" home?(Read on to answer this question...)

Mobile vs. Modular

A mobile home is NOT the same as a modular home, and vice versa. The two types of homes can be best defined by looking at the differences rather than the similarities. Some of the differences are:

Mobile Homes generally:
  • Have a steel frame
  • Use 2x8 floor joists
  • Are built to CSA Standard Z-240(not building code)
  • Can be moved at a later date, after having been originally installed


Modular Homes:
  • Have a wooden frame
  • Use engineered floor trusses
  • Are built to CSA Standard A-277(Canadian national building code)
  • Are also held to BC Building code standards
  • Can NOT usually be moved after having been placed on-site
As you would imagine, lenders find modular homes to be the more preferred option of the two, but this is at the expense of higher initial cost and the inability to move the building later. Modular homes act, look, smell, and think more like a conventional home and if there's one thing mortgage lenders enjoy, it's convention!

While choosing to opt for a mobile or modular home may limit your choice of lenders, a well-trained Mortgage Broker can help you to find a lender who will suit your needs. It is in situations like these that the power of a good Mortgage Broker's lending network can really shine and help you find the best option for your dream property, no matter the construction type. There may be local Credit Unions and specialty lenders who will offer options to suit, or there could be opportunities to shop the big lenders if the property fits their criteria. When you're ready to discuss the options available, give me a call or visit my website to get a secure online mortgage application started!

And most importantly, as always, Ask Questions! Take the time to interview your chosen professionals when making the decision to purchase or refinance your home, it may very well be the single biggest investment of your lifetime. Are they educated in the niche you're interested in? Are they up-to-date? Are they professional, courteous, and ethical?

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