Remortgage of an Unencumbered Property
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Remortgage of an Unencumbered Property
Martin Dennis explains the process of remortgaging an unencumbered property.
What is an unencumbered property?
It’s just simply a property that doesn’t have a mortgage on it.
Can you remortgage an unencumbered property? How does it work?
Yes, you could. It’s just the same as a normal remortgage, other than you’re not replacing a current mortgage loan.
Why would someone need to remortgage an unencumbered property? How do I know if I qualify to do this?
You might want to remortgage an unencumbered property because you’re looking at doing some home improvements or an extension, for example. It’s just a way of accessing money and repaying it over a longer term.
The borrowing is secured on your property, so this does have an element of risk. But there are many reasons to remortgage. You might want to buy an investment property, or a holiday home. You might want to help your kids out with some money. There’s lots and lots of reasons.
The way to check if this could work for you is to speak to a broker, to narrow down what the options are and see whether you’re eligible. We could also look at whether there are some other means of financing without going through the mortgage process.
Can I remortgage a property in poor condition?
It depends on how poor the condition is, because the lenders will secure the mortgage on the property. But if it needs work, depending on the equity you’ve got and what you’re looking at raising, there are options to remortgage.
If you’re looking at doing a big property renovation there are special mortgages for that kind of thing. We would look at this on a case-by-case basis, but there’s no reason why not.
Can I remortgage an unencumbered property if I’m retired?
Potentially. It depends on age and your pension income. Everything is affordability-based, because a mortgage lender doesn’t want to put you into a situation that will significantly impact your ability to manage everyday things.
There’s no particular reason you couldn’t, but again we would explore it on a case-by-case basis. Speak to a broker and we could work those things out.
Can I remortgage an unencumbered property if I’m self-employed or freelance?
It’s all down to income proof, which could be led by how long you’ve been doing the job. Just as for anyone that’s employed, it’s about your income and whether it’s affordable to do what you’re looking to try and do. For some people it is, for others it isn’t.
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What if I have bad credit or a bad credit history? Can I still remortgage an unencumbered property?
Yes. Just think of it like a standard mortgage. ‘Unencumbered’ just means there’s no current mortgage on it. There’s normally a lender out there for everybody. What you’ll be offered will depend on your circumstances, but there should be no reason that you can’t.
What are the benefits of and risks when remortgaging an unencumbered property?
You’re taking a property that you own outright, and you’re raising finance against it. That’s always a risk, isn’t it?
But the benefits will depend on what you’re looking at doing. If you’re remortgaging for an extension, that might save you the hassle of having to move – because now the property may accommodate a growing family. If you like the house, there’s no need to move. There are pros and cons to everything.
What else do we need to know about remortgaging an unencumbered property?
The reason we’re here is to make sure that anyone thinking about any type of mortgage gets the right kind of advice. We’ll look at whether that mortgage is appropriate, or whether there’s other options that might be better for that person and their circumstances.
That’s what we do at The Mortgage Company. We give you honest advice based on your circumstances. If it’s right for you, we’ll tell you, but if it isn’t, we’ll talk that through as well. Just come for a chat and we’ll give you the most appropriate advice.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
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