Refinancing a chattel mortgage is possible, especially for manufactured homes. If the home is affixed to land, you may be able to refinance into a traditional mortgage, offering lower interest rates and longer terms. you may be able to refinance into a traditional mortgage if the home is affixed to land However, challenges include asset depreciation and fewer specialized lenders. Assess your current loan, credit, and asset value to determine if refinancing is beneficial.
What Is a Chattel Mortgage—Refresher
A chattel mortgage is a type of secured loan where the borrowed funds are used to purchase movable personal property (like equipment, vehicles, or manufactured homes). The lender places a lien on the asset, which is removed once the loan is paid off.
Key features:
- Ownership from day one
- Used for business equipment, mobile homes, and vehicles
- Collateral is the asset itself (not real estate)
- Fixed or flexible loan terms
Can You Refinance a Chattel Mortgage?
Yes, refinancing is possible—but it’s not always straightforward.
You can refinance a chattel mortgage if you:
- Want lower monthly payments
- Found a lender with a better interest rate
- Want to extend the loan term to improve cash flow
- Need to consolidate debts
- Want to upgrade equipment or move from a chattel loan to a traditional mortgage (in the case of real property upgrades)
Refinance Options for Chattel Mortgages
1. Standard Refinance With a New Chattel Lender
This is a typical route where you switch to another chattel lender offering better terms.
2. Refinance Into a Traditional Mortgage (If Property Qualifies)
In cases like manufactured homes, if the home is now on a permanent foundation and titled as real property, you may qualify for a traditional mortgage.
Example:
Your mobile home is now affixed to land you own. By converting it to real property, you can refinance with a lower-interest mortgage and longer terms (15–30 years).
3. Equipment Refinancing (Business Loans or Leasing Options)
Business owners may refinance under a new equipment loan or switch to an equipment lease if the asset qualifies.
Example:
You refinance a $20,000 CNC machine with a new 3-year equipment loan and lower your interest rate, freeing up monthly cash flow.
Refinancing Chattel Mortgage vs. Traditional Mortgage
Aspect |
Chattel Mortgage Refinance |
Traditional Mortgage Refinance |
| Collateral | Movable asset (vehicle, equipment) | Real property (home or land) |
| Loan Terms | 1–7 years | 15–30 years |
| Interest Rates | Often higher (6%–12%) | Lower (3%–7%) |
| Qualification Requirements | Business income, credit, asset value | Income verification, credit, property |
| Popular Use Cases | Equipment, mobile homes, trucks | Homes, investment properties |
Common Challenges in Refinancing a Chattel Mortgage
Despite the benefits, refinancing a chattel mortgage may come with hurdles:
1. Asset Depreciation
Assets like trucks, equipment, and mobile homes lose value over time, making it harder to qualify for a new loan.
Tip: Refinance early before too much value is lost.
2. Fewer Lenders Specialize in Chattel Loans
Compared to home or auto loans, fewer banks and credit unions offer chattel refinance products.
Tip: Look into credit unions, alternative lenders, or industry-specific lenders (like equipment finance firms).
3. Prepayment Penalties
Some chattel mortgages include early repayment fees.
Tip: Review your existing loan contract to check for penalties before refinancing.
4. Title and Ownership Complications
If your asset isn’t titled correctly or still listed as personal property, you may be ineligible for traditional refinancing.
Tip: For manufactured homes, ensure you’ve converted the title from personal to real property, if needed.
When Does Refinancing Make Sense?
Consider refinancing if:
- Interest rates have dropped since your original loan
- Your credit score has improved
- You want better cash flow or shorter/longer terms
- You’re consolidating business debts
- The asset still holds good value
How to Start the Refinancing Process
Here’s a simplified step-by-step guide:
- Review your current loan
- Look for remaining balance, rate, and penalties
- Check your credit and business finances
- Stronger credit = better loan offers
- Get an updated valuation of the asset
- Especially for older equipment or mobile homes
- Compare lenders
- Look beyond banks: consider online lenders, equipment finance specialists, and credit unions
- Get quotes and pre-approvals
- Apply and submit documents
- Tax returns, income statements, asset details
- Close the new loan and pay off the old one
Try this refinance calculator to estimate your savings.
Related Reading
- Chattel Loan vs. Traditional Mortgage: Which One Fits Your Purchase?
- Equipment Financing for Small Businesses: Is a Chattel Mortgage Right for You?
- How to Convert a Mobile Home to Real Property
Pros and Cons Recap
Pros of Refinancing a Chattel Mortgage:
- Lower monthly payments
- Better interest rate
- More flexible terms
- Possibility to upgrade asset type or loan type
Cons to Watch For:
- Limited lender options
- Asset depreciation may limit eligibility
- Prepayment penalties
- Potential title issues with mobile homes
Final Thoughts:
Yes—if the math and timing make sense. Refinancing a chattel mortgage can be a smart move to lower costs, improve cash flow, or switch to a better loan structure. But the key is evaluating your asset’s value, your current loan terms, and your financial goals.