Remortgage of an Unencumbered Property
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Remortgage of an Unencumbered Property
Adam Messer talks us through remortgaging an unencumbered property.
What is an unencumbered property?
It’s a property with no mortgage on it. We just refer to a mortgage-free property as unencumbered.Can you remortgage an unencumbered property?
Yes, you absolutely can, but it may depend on what you’re going to use the money for.You could be investing in another property or doing home improvements.
You can remortgage a property for any legal purpose these days, although lenders shy away from business reasons. So if you’re putting the money into a business of some sort, that’s a bit more specialist – but it can be done.
Why would you need to remortgage an unencumbered property? How do I know if I qualify to remortgage?
Perhaps you inherit a property that’s not got a mortgage on it. You could use that property to your advantage by remortgaging it and releasing some money to go and buy some investment properties – or you could just use the cash to have a jolly good time with!Or maybe the property needs some refurbishment and you could do some improvements to it. There are all sorts of reasons why you might want to remortgage a property that is not currently mortgaged. And if you do, then get in touch.
Can I remortgage an unencumbered property in poor condition?
Yes, but it does depend on the condition. There’s always an option for different types of finance, but for a normal standard mortgage the property needs to be habitable.You need to be able to go and spend the night there, so it needs running water, some sort of toilet facility and some sort of kitchen. It doesn’t need to be all built in and shiny, but if there’s a kitchen sink and a microwave, that’s potentially fine.
You also need to have some sort of heating – even an electric heater attached to the wall. It doesn’t need to be full central heating. You just have to be able to exist there for a little while. So for that you need heat, light, water, bathroom facilities and the ability to heat up a ready meal.
If you’re trying to borrow 95% of its value and you’ve just put a microwave in and the rest of the property is in a bad way, a lender’s probably not going to go for that. But if you’re trying to borrow 50% or 60% of the value that could be OK.
There’s another point here if you’re planning to let the property out. In that case it needs to be more than just habitable. No-one’s going to pay to rent a poor property from you. You’re not going to be able to get a Buy to Let mortgage on that at all.
You could get a bridging loan, though. There are lenders that will secure a loan on property in any condition. A bridging loan is a bit more expensive – there’s a whole section on that on the website – but it’s another way you could release the money.
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Can I remortgage an unencumbered property if I’m retired?
Yes, potentially. It’s all about income these days. Assuming this is a property you live in, if you’re retired, we will be looking at your pension income. It’s fairly safe income – it’s not going anywhere.
There are mainstream lenders that will lend to age 80 or 85 on normal pension income. That could be a repayment mortgage, or even interest-only. We do need to think about what would happen at the end of an interest only term – and again there’s a section on the website about that.
We could also potentially look at more specialist retirement mortgages including equity release, which is a whole other area that we won’t go into now.
So being retired doesn’t mean that you can’t get a mortgage. You might not get as big a mortgage as you might have done once. But it can be done.
Can I remortgage an unencumbered property if I’m self-employed or freelance?
Yes, and again, there are previous podcasts about the self-employed, freelancers and contractors and company directors on the website. But the basic principle is the same – it’s all about your income.
It doesn’t really matter if you’re wanting to remortgage an unencumbered property or getting your first mortgage – and it’s the same for anyone whether they are employed, self-employed or retired. However your income is made up, we will be able to use it.
Can I remortgage an unencumbered property with a bad credit history?
Potentially, yes. Again it doesn’t matter whether it’s unencumbered or not. With credit history it depends how bad it is. There’s content on the website about bad credit as well.
Bad credit needn’t stop you. If it’s fairly severe you may have to go to a slightly more specialist lender, which may well come with a higher interest rate. But it needn’t necessarily stop you getting that mortgage.
What are the benefits and risks when remortgaging an unencumbered property?
There’s always a risk, because your home may be repossessed if you don’t keep up the repayments on a mortgage of any description.
But the benefit of remortgaging an unencumbered property is to release money from a property to do what you like with. So if you’re in the market for that sort of thing, there’s definitely something that you can do.
How can a mortgage broker help with remortgaging an unencumbered property?
It’s about knowledge, especially with things we’ve covered here like bad credit, the self-employed, poor property condition and things. You can’t just have a quick Google search to find the best lender or the lowest rate for those. It doesn’t doesn’t really work like that.
We need to go to the right lender – and a decent mortgage broker will know who that is. We take care of everything for you – so that’s why you need to speak to a mortgage broker.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Useful Links
- What are my Remortgage Options?
- Remortgaging For Home Improvements
- Remortgage to Release Equity
- Remortgage to Repay Help To Buy
- Remortgage When Self – Employed
- Interest Only Remortgage
- Buy to Let Remortgage
- Product Transfer Mortgage
- Remortgage of an Unencumbered Property
- Remortgage to Pay Off Credit Card Debt
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