I Own My Home Outright – Can I Remortgage?

REMORTGAGING | 24.08.2022

Owning your own home and being mortgage-free, can be a wonderful feeling. However, there are a few occasions where it may be necessary to remortgage the home that you own outright, to obtain some additional cash flow.

Why remortgage a home you own outright?

If you own your home outright, this is also known as an unencumbered home or property. Owning your own home usually indicates that you are financially comfortable, as typically, a household's largest outgoing is its remortgage repayment. Individuals who own unencumbered property will remortgage their properties for a number of reasons. Here are some common reasons:

Home improvements
To purchase a second home
To buy an investment property
To consolidate debts
To buy land
To pay for a wedding or special event
To pay for a necessary purchase e.g car etc
Due to separation or divorce from a partner

When deciding to remortgage your home, your lender will likely want to know what you intend to do with the money that is released from your property.

How much can I borrow?

How much you can borrow, depends on the value of your home, along with the purpose of the remortgage. Another factor this is considered is the LTV (loan to value ratio). Speaking with a mortgage advisor is a great way to understand exactly how much you can borrow, with your specific circumstances.

What are the eligibility criteria for remortgaging my home?

Applying to remortgage your unencumbered home is straightforward, as you post considerably less risk to the lender due to the amount of equity in the property. However, as with other mortgage loans, there are still strict criteria that need to be met. Such as:

Credit history checks
Analysis of other debts and outgoings
Applying the maximum Loan to Value ratio
Maximum lending calculations based on your income

Lenders will also want to know the market value of your home, how much you intend to borrow, as well as determine whether or not you can afford the repayments.

Can I get a better mortgage deal if I own my home outright?

Being an owner of an unencumbered property can present less risk to lenders, meaning that remortgaging whether it’s on a residential or let-to-buy mortgage could be possible through a range of mortgage deals, depending on your circumstances. The lowest and best rates are offered to those borrowers who present a very low risk of defaulting on their remortgage payments. Owning your property outright suggests to lenders that you are financially stable and responsible, seeing as you would have had to make remortgage payments in full and on time throughout your previous mortgage agreement to get you to this point. This is also the case for individuals who own property without having previously taken out a mortgage could also be seen in a favourable light by lenders as they can offer a level of security by means of owning 100% equity.

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

Inheriting property can sometimes leave those receiving it feeling a little lost with what to do with it, or even burdened if the property requires repair to sell it for a fair price. If you have inherited unencumbered property, remortgaging could be a fairly simple process, depending on eligibility checks.

How to calculate your mortgage?

If you’re wondering how much your mortgage on your unencumbered property will cost, our mortgage repayment calculator can tell you how much your mortgage repayments will be each month, and overall. Simply enter the amount you want to borrow, the term length, and the interest rate and the calculator will do the rest. If you’re looking to mortgage or remortgage an unencumbered property our team here at Taylor Made can help you find the best deal for you, and your circumstances. Call us on 0345 305 2540 or contact us here to get started.

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In the event that you wish to complain, you can contact us by email, telephone or letter.

Our address for this is:
Complaints Officer, TaylorMade Finance Ltd, 4 Church Road, Urmston, Manchester, M41 9BU. Our email address is info@taylormade-finance.co.uk and our telephone number is 0161 776 1089. We will then investigate the issues raised and inform you of our findings. Should you be unhappy with the resolution to your complaint you may contact the Financial Ombudsman Service, who can be contacted at the following address: Financial Ombudsman Service, Exchange Tower, London, E14 9SR.

Email: complaint.info@financial-ombudsman.org.uk
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