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    If you are living in an unencumbered property, by which we mean a mortgage free property that you own outright, you might be interested in a remortgage to release a lump sum of money from the property’s capital. An unencumbered mortgage gives homeowners who own their property outright an innovative opportunity to leverage it for financial flexibility. This guide explains how it works as well as it’s advantages.

    Understanding Unencumbered Mortgages

    Before we explain how an unencumbered mortgage works, let’s explain what unencumbered means.

    What does Unencumbered mean?

    The term “Unencumbered” mortgage refers to a mortgage that you might take out on a mortgage-free home. You can use it to release the equity in your home to pay off other debts, raise a deposit for a new property, carry out home improvements, or any other purpose for which you may benefit from raising capital.

    Benefits of a Unencumbered Mortgage

    Owning your home outright give you a big advantage in the property game. But what if I told you that your mortgage-free home could be the key to even more? Let’s unwrap the benefits of an unencumbered mortgage:

    1. Quick Cash, Your Way: Picture your mortgage-free home as a secret vault of opportunity. With an unencumbered mortgage, it’s like having a key to this vault, ready to unlock funds for anything from a sudden repair to a bold new business idea.
    2. Better Interest Rates: Having a fully paid-off home tends to impress lenders into offering you much better interest rates. Your unencumbered home gives you such a great financial score, making borrowing more affordable.
    3. Retirement Flexibility: Close to retirement and dreaming of more? An unencumbered mortgage can turn those dreams into plans, padding your retirement fund for those extra comforts or long-awaited adventures.
    4. Debt Juggling: If you’re spinning multiple debt plates, an unencumbered mortgage can be great solution. It consolidates those debts, transforming a financial juggling act into a smooth single payment.
    5. Fuel Your Investment Dreams: Your mortgage-free home can be a springboard for further investments. Whether it’s a second home or a new business venture, the equity in your home can provide the necessary capital to bring those dreams to life.
    6. Family Financial Hero: There’s something special about being able to extend a financial helping hand to your loved ones. Your home’s equity can be that generous resource, whether it’s for a major family event or setting up the kids with a new start.
    7. A Financial Fit Just for You: No two financial stories are the same. That’s why an unencumbered mortgage isn’t off-the-rack; it’s tailor-made, designed to fit your unique financial narrative and future aspirations.

    Is getting an unencumbered mortgage hard?

    In lots of ways having an unencumbered property can make getting a mortgage a more simple process. It definitely can speed up a remortgage as you will not have an existing mortgage to repay.

    However, if you have bad or adverse credit, are approaching retirement, or have experienced a significant drop in income, you may find it hard to get an unencumbered mortgage.

    This doesn’t mean getting a mortgage is out of the question.

    With over 40 years of experience of remortgaging clients that own their property outright, it’s been our observation that they often have more options than they first think. With mortgage lenders now happy to consider lending to an older age it can also be an affordable option compared to taking out a loan. – Stephen Roberts

    Specialist unencumbered mortgages

    Some specialist lenders offer unencumbered mortgages to people who have been turned down by the major high street lenders, so you should speak to a mortgage broker for more information on these. A broker can also advise you on what you might need to do to improve your chances of a successful application.

    Steps for Applying for an Unencumbered Mortgage

    Taking the first steps toward applying for an unencumbered mortgage can be both exciting and intimidating; here, we break it down so you can tackle this journey with confidence and clarity.

    Step 1: Initial Consultation

    Schedule an initial consultation with one of our experienced mortgage advisors. In this meeting, we’ll explore your financial goals, explore available options, and give a clear idea of what to expect. It is also an opportunity for questions to be asked and to gain further understanding on how an unencumbered mortgage might fit your life better.

    Step Two: Document Prep

    Having all necessary documents ready will expedite and help us evaluate your situation more precisely. These may include proof of income, bank statements, ID documents and any relevant property paperwork. Having these ready will streamline the process and give us more insight into your unique circumstances.

    Step 3: Application Submission

    Once all the required documents are in order, our team can assist in filling out and submitting your mortgage application. They’ll walk you through each section to make sure all information provided is accurate and complete.

    Step 4: Affordability Assessment

    A key part of the loan application process is an affordability evaluation. Lenders will review your finances to make sure you can comfortably manage mortgage repayments – this evaluation includes reviewing income, expenses, and any existing debts.

    Step 5: Property Valuation

    Your lender will arrange to have your property valued, as this step determines the amount of equity that can be borrowed against.

    Step 6: Mortgage Offer

    Once valuation and assessment is complete, lenders will issue a mortgage offer document outlining its terms: loan amount, interest rate and repayment period.

    Step 7: Legal Processing

    Once an offer is accepted, legal processes begin in earnest. Conveyancing services provide essential assistance during the mortgage application process ensuring everything runs smoothly prior to closing on an agreement.

    Step 8: Completion

    Once all legalities of your loan have been completed, your mortgage has been completed and released funds can be put towards home improvements, debt consolidation or any other significant investment opportunities.

    Step 9: Ongoing Support

    Even after completion, our team remains available to offer guidance and advice – helping you manage your mortgage effectively throughout its term.

    Keep in mind, each individual situation is distinct, so we provide personalised guidance throughout your mortgage journey. Are you curious to explore unencumbered mortgage possibilities? Reach out to us now so we can start working toward helping your goals!

    Remortgage your property that you own outright
    Put the odds of a successful remortgage in your favour with the help of a qualified and experienced mortgage broker.

    Understanding Your Eligibility for an Unencumbered Mortgage

    Thinking about an unencumbered mortgage? Great! Let’s walk through what it takes to be eligible. It’s not just about owning your home outright; a few more boxes need ticking to get the green light from lenders.

    Age and Job Stability – More Than Just Numbers

    First up, let’s talk about age and employment. Whether you’re in your prime working years or eyeing retirement, what really matters is a steady income. Lenders love consistency. So, if you’ve got a regular paycheck or a reliable source of income, you’re off to a good start.

    Show Me the Money – Your Income Matters

    Income is king in the world of mortgages. Lenders will peek into your financial world – salary, side hustles, investment returns, you name it. They want to see that you’ve got the funds to comfortably handle a mortgage without breaking a sweat.

    Credit History – Your Financial Footprint

    Now, let’s talk credit. It’s like your financial fingerprint – unique and telling. A few hiccups in the past? Don’t sweat it too much. It’s more about showing you’re on a good path now. The cleaner your credit history, the smoother your journey to getting that mortgage.

    Balancing Act – Debts vs. Income

    Debt-to-income ratio – sounds technical, but it’s pretty straightforward. It’s all about balancing what you earn against what you owe. Lenders dig a lower ratio; it shows you’re not juggling too much debt and can take on a mortgage without tipping the scales.

    The Property – More Than Just Four Walls

    Your property is a big part of the equation. Lenders aren’t just picky about who borrows, but also what you’re borrowing against. They’ll have a good look at your property type, condition, and a few other bits and bobs to make sure it fits their bill.

    Every Lender’s Got a Type

    Just like people, every lender has their preferences. Some might be flexible, others a bit more rigid. It’s about finding the right match. That’s where we can play cupid – connecting you with a lender who gets you and your situation.

    So, there you have it! Think you tick these boxes? Or maybe you’re not quite sure? Either way, give us a shout. We’re here to chat through your options, answer those burning questions, and guide you on your unencumbered mortgage journey. Let’s make it happen!

    Remortgage your property that you own outright
    Put the odds of a successful remortgage in your favour with the help of a qualified and experienced mortgage broker.

    Lender’s Perspective: Approving Your Mortgage

    Lenders want to know that you can make your monthly mortgage repayments before they let you remortgage a property. As such, they will take several factors into account when determining whether or not to approve your unencumbered mortgage application and they will check such documents as your bank statements and payslips. Factors include:

    • Your age
    • Your income
    • Your spending
    • Your credit history
    • Your debt-to-income ratio
    • The type of property you would like to mortgage

    If you meet the mortgage lender’s criteria, you have a better chance of being approved for an encumbered mortgage. But if they suspect you won’t have the means to make your monthly repayments, you may be turned down.

    If your application isn’t approved, don’t worry! Contact a mortgage broker at YesCanDo Money, and we will look at all the unencumbered remortgage deals that are available for somebody with your set of circumstances.

    Where can I get the best unencumbered mortgage lenders?

    With over 140,000 mortgage deals being offered by the 90+ lenders on the mortgage market, it can be hard to pinpoint the right deal for your own personal circumstances.

    As mortgage brokers, this is where we come in. A mortgage advisor at YesCanDo Money can point you toward the unencumbered mortgage deals that are right for you, no matter your reason for raising capital for your remortgage. Get in touch with us today and arrange an appointment for the free expert advice and support that we can give you.

    Special Considerations for Unencumbered Mortgages

    Delving into the world of unencumbered mortgages opens up a realm of unique opportunities and considerations. It’s crucial to navigate these waters with a keen eye on certain factors that can influence your journey and outcomes.

    Can I get a buy-to-let mortgage on my unencumbered home?

    In short, the answer is yes, but as is the case for any would-be property investor, unencumbered mortgage lenders will usually want a 25% deposit for the buy-to-let mortgage and you may be subjected to higher mortgage rates and fees.

    If you own your property outright, you will likely have enough equity built up for your buy-to-let mortgage deposit. But before you are approved for a BTL remortgage, the lender will want to know the projected rental income on the property and how you plan to make monthly repayments if the interest rate rises or if you have a shortfall of tenants.

    I’ve inherited a property, can I get a mortgage for it?

    Yes. If you have inherited a property that had no mortgage, you can take out a mortgage to finance home improvements if you want to sell it, or you could take out a Buy to Let mortgage if you want to rent the property out to others.

    Remortgaging an inherited property

    Remortgaging an inherited property is a fairly simple process but you will still be subject to most lenders’ criteria and affordability checks. To improve your chances of a mortgage offer and to gain access to the best deals available, contact our team of expert mortgage professionals.

    Remortgage your property that you own outright
    Put the odds of a successful remortgage in your favour with the help of a qualified and experienced mortgage broker.

    Getting the Right Help

    If you want to remortgage your unencumbered property to raise capital, we can give you the mortgage advice you need. We will let you know how getting works, give you information on the mortgage types that are right for you, and find you the best mortgage deal for somebody in your circumstances.

    As we are a FEE-FREE mortgage broker, there is no charge for any of our services. Contact us today using the details on our website and we will arrange a meeting for you with an appointed representative who will give you all the free expert advice and support you need during your mortgage journey.

    Unencumbered Mortgage FAQs

    Yes, although your choice of mortgage lenders may be smaller if you’re retired or near retirement age as some high street lenders may consider you a risk if your income has changed. Contact us if you would like to know more and we will put you in touch with a specialist lender that is happy to take applications from older applicants.

    Yes, but you may be charged a higher rate of interest because of the level of risk you pose when compared to somebody in permanent employment.

    The loan-to-value ratio of your mortgage might also be less although if you are applying for a loan using your unencumbered property as security, you may still be able to access some of the better-unencumbered mortgages on the market.

    If you’re nearing the end of your mortgage, you may have built up a substantial amount of equity. As such, you will be in a strong position to remortgage.

    You could take out a mortgage with the same lender but if there is a chance that you might be offered a better mortgage deal elsewhere, it is worth making the switch to another lender.

    Talk to us if you are nearing the end of your mortgage as we will advise you on the best lenders and deals that are right for your situation.

    It depends on the severity of your credit issues. If you have taken steps to improve your credit rating, and your last credit issue was a long time ago, you may be able to get an unencumbered mortgage.

    If you haven’t taken steps to improve your credit rating, your loan application may be turned down or you may be offered a mortgage with specialist lenders at higher interest rates.

    It’s advisable to build your credit score before you apply for a mortgage as this will improve your chances of acceptance and attaining lower rates of interest. You can build your credit score by doing such things as paying off the balance on any personal loan you hold, making bill repayments on time, and disputing errors on your credit file. For more advice, speak to a mortgage advisor on our team.

    Yes, you can remortgage if you own your house outright. You can use the value of your home as security against a new mortgage to release equity for personal purposes or to buy another property.

    Why remortgage when you own your house outright? Your reasons for remortgaging will depend on your personal circumstances. Common reasons to remortgage include:

    • Remortgage to pay for home improvements
    • To consolidate debts
    • To buy an expensive purchase, such as a new car
    • To gift a first-time buyer in the family
    • To buy a holiday home

    There are other reasons why you might want to release a lump sum of money from a mortgage-free property so this list is not meant to be exhaustive. As to whether or not you will be given a mortgage will depend on how happy the lender is with the reasoning behind your mortgage application.

    Typically, mortgage providers will offer you the same rates and incentives when you own your home outright as if you had a mortgage on it. Because you have already proven your ability to pay off a mortgage. In the lender's eyes, this shows them that you are financially responsible and less of a risk to themselves, and therefore you will not be seen as a higher risk.

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    Jane Rowe (CII)
    Jane Rowe (CII)

    Jane (CII) is an outstanding Mortgage & Protection Adviser at YesCanDo Money. Boasting decades of industry expertise and an overwhelming passion for client care, she excels at guiding her clients whether they're making their first steps onto the property ladder, moving homes or exploring buy-to-let opportunities. Jane stands out as a true professional by finding the best solutions and prioritising client financial security first and foremost.

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