Simply put, an unencumbered remortgage is a remortgage on a property that is free of debt. It can also be known as an unencumbered mortgage.
You may have recently purchased a property with cash, or just paid off your mortgage completely, but you may want to remortgage in order to upsize or borrow funds against your property for various reasons.
How does it work?
By taking our a remortgage on your existing property, either that you have paid off completely via a mortgage or purchased using cash, you are borrowing funds against your property.
Lenders can either consider this transaction a remortgage or a mortgage, and each lender is different.
Regardless of whether they class it as a remortgage or a mortgage, the lender’s usual criteria applies and they will review your income and affordability levels as well as your credit history.
In what scenarios would I take out an unencumbered mortgage?
You may have recently inherited a property, or want to buy out an ex-partner once you own your house outright.
Both of these scenarios come with their own issues.
If you have recently inherited a property, some lenders have a 6 month rule which stops them lending to someone who has owned a property for less than six months.
If you are looking to buy your ex-partner out of your property, a transfer of equity will usually be required too, which comes with its own complications.
How do I qualify?
Lenders look at these transactions just like a normal mortgage product, and will take into account income, affordability, credit history and loan-to-value percentage.
If you have a poor credit history, despite owning the property, come lenders may not consider your application, so it’s important to discuss your options with one of our expert advisers.
For advice on getting an unencumbered mortgage, or remortgage, speak to one of our expert advisers who will be able to help you with the next steps.