How remortgaging your unencumbered home could free up some cash


Being mortgage-free can be a wonderful thing. No more monthly payments to a mortgage lender and you own your home completely.

But there may come a time when you could really do with some extra money.

You might be planning some renovation work, for example, such as a roof conversion or extension.

Or you might want to help one of your children to get on to the housing ladder.

The good news is that you could free up some cash by getting a new mortgage on your home.

Is it a mortgage or remortgage?

If you’ve paid off your mortgage, and haven't got any other loans secured against it, your home is what lenders describe as ‘unencumbered’. 

Some lenders offer remortgage products if your home is unencumbered, while others offer new purchase products. 

Lenders will assess your mortgage application in the same way for both cases.

The fact that your home is unencumbered may affect the rate you’re offered.

It may also impact your eligibility for incentives such as free valuations or the lender covering your legal expenses, which are available on most remortgage applications.

How easy is to get a mortgage on an unencumbered home?

You’re likely to have plenty of lenders and products to choose from if you take out a mortgage against your unencumbered home. 

This is because the risk is lower for the lender if you own your home outright. And paying off your previous mortgage shows them you’re responsible when it comes to borrowing.

However, your lender will still want to cast an eye over your financial position and credit record to make sure that you can afford the mortgage. 

Can you afford the repayments?

“If you’ve already paid off your mortgage, but then decide to borrow against it again, you should be in a strong position to get another mortgage,” said Ahmed Choudhry, a Mortgage Adviser at Trussle.

“However, this isn’t something you should rush into. It’s important that you consider how adding a monthly mortgage payment to your outgoings again will impact your disposable income.

“If you do decide it’s right for you, you’ll probably have lots of mortgages to choose from, and with potentially different criteria depending on which lender you use.

“If you’re not sure which would be best for you, get some free advice from a mortgage broker who’ll be able to assess your situation and talk you through your options.”

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