Remortgage of an Unencumbered Property
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Remortgage of an Unencumbered Property
Xavier Collin talks about remortgaging an unencumbered property.
What is an unencumbered property? What is the definition?
An unencumbered property is a property that’s owned outright without any mortgages, loans or legal restrictions attached to it.
Can you remortgage an unencumbered property?
Definitely. You can raise funds because there’s no borrowing already tied to the property. It would be subject to relevant factors, like what you’re looking to use the funds for, plus affordability and credit scoring. These are all things your mortgage advisor would check for you before making a recommendation.
Why would you need to remortgage an unencumbered property? How do I know if I qualify to remortgage an unencumbered property?
Typically you’d remortgage an unencumbered property to raise capital for a specific reason. Examples could be raising funds for home improvements, consolidating debts, buying an additional property, gifting to family or potentially business purposes.
There are many different reasons that you might want to raise capital – they aren’t just limited to those examples.
Your advisor will confirm whether you can remortgage the property and, if so, how much you could borrow. Once we’ve received all the relevant information and documentation from you, we’ll provide a full recommendation.
If anyone listening wants to explore this, I’d highly recommend reaching out for some professional advice.
Can I remortgage a property in poor condition?
To qualify for a standard mortgage, the property needs to be in a habitable condition as a minimum – specifically, with a working kitchen, roof, running water, heating, electricity and drainage.
The property doesn’t necessarily need to be in top condition, but it must be habitable and meet those factors.
If the property isn’t habitable, you could still secure finance against it with bridging finance. This is short-term finance typically used to make the property habitable. You can then secure a normal mortgage against it or you can sell it – whichever suits you best.
Bridging finance is very different to a standard mortgage. If you need that kind of finance, we would refer you to one of our third party partners for advice.
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Can I remortgage an unencumbered property if I’m retired?
Yes, you can. If your retirement income is sufficient, you can still get a standard mortgage. Alternatively, though, you could explore the option of a lifetime mortgage, where the amount you can borrow is based on your age, not your income. The minimum age is 55 for these products.
Again, one of our third party partners can provide advice on that type of mortgage, as the regulation and criteria surrounding it are very different to a normal mortgage. If we identify that as suitable, our partners would provide full advice.
Can I remortgage an unencumbered property if I’m self-employed or freelance?
Yes, you can. The income when you’re self-employed or a freelancer will be assessed slightly differently compared with being employed, but you can still definitely look to remortgage your property.
Can I remortgage an unencumbered property with a bad credit history?
It’s the same as obtaining any mortgage with a bad credit history. There are lenders that cater for people with poor credit. Your mortgage advisor will assess your circumstances and recommend the most suitable lender for you.
It’s just subject to the type of bad credit history you’ve got. As we’ve mentioned before, that will differ from person to person – but there are options available.
What are the benefits and risks when remortgaging unencumbered properties?
We’ll start with the pros first – and really there’s just one, which is access to money. Remortgaging an unencumbered property can allow you to raise a lump sum of funds,
for whatever reason. It’s just subject to the lender being comfortable with that reason, which of course your advisor would check in advance.
The disadvantage is that you’re now liable for a debt – and of course failure to maintain your repayments could result in a negative impact on your credit file, and potentially legal action.
The worst case scenario is that the property could be repossessed if you can’t keep up with the repayments.
How can a mortgage broker help here? Is there anything else to consider?
An advisor will let you know what is and isn’t possible based on your individual circumstances and objectives. By knowing your options, you can plan more accurately.
THINK CAREFULLY BEFORE SECURING ANY OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.
THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE PRECISE AMOUNT OF THE FEE WILL DEPEND UPON YOUR CIRCUMSTANCES BUT WILL RANGE FROM £99 TO £999 AND THIS WILL BE DISCUSSED AND AGREED WITH YOU AT THE EARLIEST OPPORTUNITY.
ASSET HARBOUR MORTGAGE AND PROTECTION LIMITED TRADING AS ASSET HARBOUR MORTGAGE AND PROTECTION ARE AN APPOINTED REPRESENTATIVE OF HL PARTNERSHIP LIMITED, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
