UNENCUMBERED REMORTGAGE

Updated 10th August 2021.

Unencumbered Remortgage Advisors.

An unencumbered remortgage happens when you own a property outright with no mortgages or other secured debts on the property. This could arise from recently paying off the mortgage or buying a property outright such as at an auction.

Subsequently, you may now want to raise some capital from the property, which you can do so with an unencumbered remortgage. Homeowners may wish to remortgage an unencumbered property for several reasons, such as debt consolidation, home improvements, purchasing another property or capital raising for any legal purpose.

Check out our ‘all you need to know’ guide to unencumbered remortgages below, where we will answer all of your commonly asked questions.

Scroll down for more information and FAQ’s.

What is an unencumbered remortgage?

If you have completely paid off your mortgage, inherited a property or purchased it outright with cash this means your property is unencumbered. Therefore, the term used is an unencumbered remortgage on a home that is mortgage free.

Remortgaging a property you own outright is indeed possible. One major factor to consider is that some lenders will class this as a purchase, and as such, you will not have access to the benefits that come with a standard remortgage. This can also be known as an unencumbered mortgage as well as a remortgage.

A remortgage is based on you currently having a mortgage already in place. However, some lenders class an unencumbered property as a remortgage. Your mortgage expert will be able to advise you on the best lender for your circumstances. Ideally you would want a lender to class this as an unencumbered remortgage, as this means you will get the usual benefits of a free valuation and free basic legal work.

Each lender will have their own way of assessing this type of application. We recommend talking to a mortgage expert, as they will be able to inform you which lenders will class this an unencumbered remortgage and provide you with the best deal for your circumstances.

You can learn more about remortgages here.

Can I remortgage an unencumbered property?

Yes, if you own an unencumbered property (mortgage free) and wish to remortgage, you can take out borrowing in the form of an unencumbered mortgage Lenders will want to know what the remortgage is for – e.g., home improvements or debt consolidation for example. Your income will used for affordability calculations and regardless of the value of the property you must pass the lenders affordability checks and the property be suitable security.

Can I remortgage a property in poor condition?

Investors and portfolio landlords will commonly purchase un-mortgageable properties for cash. They will then look to refurbish the property to release funds by either selling or renting the property.

You may also have a residential property which needs upgrading, again, you can look to remortgage an unencumbered property for these reasons.

There are several reasons why an investor would purchase with cash instead of using a mortgage or bridge finance, generally they would be:

  • The property is un-mortgageable, could be there is no kitchen or bathroom or issues with the roof (roof must be watertight)
  • Speed, the deal maybe time sensitive, such as purchasing at auction or trying to beat the stamp duty cut-off period.
  • Looking to flip the property, this would mean not being restricted to the 6-month re-sale rule.
  • The buyer cannot get a mortgage due to personal reasons, maybe currently un-employed or recently bankrupt.

Whichever way you do it, the property would now be classed an unencumbered. Generally, you would need to wait 6 months before being able to get a mortgage, there are certain specialist lenders who will still allow an unencumbered remortgage with 6 months.

There are lenders who are currently offering refurbishment mortgages. Speak to one of our mortgage experts today for the latest information.

Do I qualify for an unencumbered remortgage?

Even when you already own the property you will still need to meet the lenders criteria. The main factors will be credit history, loan to value and affordability. The amount you can raise from an unencumbered remortgage will depend on if the property is residential or buy to let mortgage.

Residential mortgages are available up to 95% depending on the reason for the mortgage and 85% on buy to let mortgages.

Can I remortgage my unencumbered property with bad credit?

Yes, there are specialist lenders who will consider you even if you have had bad credit. However, with any bad credit mortgage the interest rate will be higher than a standard high street mortgage. To check your credit report, click here

In addition, the severity and coupled with how recent the adverse credit will also be a factor. Your mortgage expert will have access to the whole of the market and be highly skilled in placing you with the best lender. The benefit of an unencumbered remortgage is the equity is already in the property and will be perceived as less risky by lenders.

Learn more about bad credit mortgages here.

Can I remortgage my property I have inherited?

Above all, this can be a difficult time both emotionally and legally. Especially, when you have inherited an unencumbered property, you may be wondering what your options are.

If you need to raise capital from the inherited property, generally, the options available will depend on what you are raising the monies for and how long you have had the property for.

For instance, when you are remortgaging a property within the first 6 months, there will be some restrictions in place. To find out about these restrictions in more detail, check out our post on remortgaging within 6 months.

Additionally, your mortgage expert will be able to provide you with the most up to date information regarding this if you have any further questions or concerns.

Remortgage an unencumbered mortgage to pay off debts?

Yes, providing you meet the criteria of the lender and pass the affordability checks. Furthermore, with any debt consolidation remortgage you need to ensure this is right for your circumstances. Thereby, if you are securing debts against your property, then seeking expert advice is a paramount. As a result, your mortgage expert will ensure that you are aware of the costs and risks involved.

in addition, most lender will have their own LTV restrictions for an unencumbered remortgage for debt consolidation. Read our guide to remortgage for debt consolidation here.

Speak to an unencumbered remortgage advisor.

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or cannot borrow what they need. However, just because one lender has declined you, do not give up!

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. In addition, all the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

Therefore, the expert brokers we work with have experience in dealing with all aspects of unencumbered remortgages, and importantly using the whole of the market to access the best deals available.

To find out how we can help call us on 0300 124 5655 or complete our enquiry form to speak to a mortgage expert.

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