In this brief guide, we are going to discuss the question “ I own my house outright can I remortgage? “ and remortgage options for homeowners.

I own my house outright can I remortgage?

Yes, you can get a remortgage on a house which you own outright. To get a remortgage you simply need to have enough equity in the house which you can borrow on. This means if you own the house outright you can, in theory, get a remortgage on 100% of the house although 100% remortgages aren’t that common.

When you get a remortgage on a house you own outright you will either give up equity in your house for the remortgage which you borrow. The remortgage lender can give you this money in cash which you can use for things such as home improvements or a holiday.

If you are in need of cash then remortgaging a property you own outright may be an option but not your only option. The other option may be to simply sell the house and by a much cheaper one and use the difference to fund whatever needs you have.

The strategy you choose will, of course, depend on the amount of time you require the money in. Selling your home and buying a new one will likely take much longer than getting remortgage on the house which you already own outright.

You may want to remortgage because:

Home Improvements,

Buy a buy to let home

Holiday Home Purchase,

Or Consolidating Other Debts.

Special Occasions (weddings / anniversaries),

Helping Out The Family,

Extract money for other investments

Holiday Of A Lifetime,

Buying A Car / Boat,

Pay University Fees Or A Tax Bill

Documents needed for a remortgage:

When looking to get a remortgage, below are some of the documents you may need:

Proof of your house’s address

Previous 3 months bank statements

Your latest p60

Previous 3 months wage payslips

Proof of identity such as your passport and drivers license

Getting the above documents ready in advance will mean that your remortgage process will hopefully run smoothly.

What to consider if you own your house outright and want a remortgage

If you own your house outright then it is very likely that you haven’t had to go through a remortgage affordability assessment or you may not know what to consider when looking for a remortgage.

What is remortgage affordability?

remortgage affordability is essentially the likelihood of you to afford a remortgage. Different remortgage lenders have different remortgage affordability criteria but they mostly focus around the same core factors.

Most lenders will look at the below points as key when considering your remortgage affordability:

Your credit score

When looking to get a remortgage, the remortgage lender will want to see your credit score to get an idea of what your financial habits have been over the past few years. If you have a low credit score or negative markers such as CCJs on your credit score then you may find it much harder to get access to a remortgage or other credit products.

Your remortgage deposit

Your remortgage deposit is also a very important factor when a remortgage lender will look to see if you can afford a remortgage. In this case, your remortgage deposit is essentially how much inequity yo own in the house versus how much debt you owe on the house. As you own your house outright you will find it much easier to get a remortgage as you will likely be eligible for better remortgage rates.

The remortgage rate is, of course, one of the biggest factors which affect your monthly remortgage repayment.

The amount you want to borrow

The amount you want to borrow will determine your loan to value rate and your loan to value rate also affects the remortgage rate which the remortgage lender will offer you on a remortgage.

This is the case even if you own the house outright.

Borrowing a sensible amount will ensure you don’t fall into an expensive loan to value rate and make the remortgage unaffordable.

The house type

The house type is also a very big factor when considering if you can get a remortgage.

If you are getting a remortgage on a non-standard construction house then the remortgage lender will likely increase your remortgage rate or refuse you.

I own my house outright and want a loan

If you own your house outright and want a loan there are several options you have and these are generally because you don’t have any existing lender with the first charge on your home or any secured debts on your home.  

This makes it much easier to geta a loan.

If you own your bouse outright and you want a loan then you can either 

Get an unsecured loan 

get a secured loan on your house

Remortgage to release equity from your house

Get an equity release product if you are over 55.

Get an unsecured loan

An unsecured loan will mean that the loan is not secured on your property. The rates may be much higher than a secured loan but you may find it much easier to get this kind of loan due to the fact that you do not have a secured debt on your property or much debt at all.

Get a secured loan on your house

If you own your house outright and want a loan then you could get a secured loan on your property. 

This may be a much cheaper loan but it will be secured on your home. This means if you end up defaulting on the secured loan you could potentially lose your home through a home repossession.

Remortgage to release equity from your house

Depending on the size of the loan you want, if you own your house outright and want a loan you could potentially remortgage to release equity from your house.

Most mortgage lenders have a minimum mortgage amount of £25,000 so if you are looking for a loan for a smaller amount then it may be best to get a secured or unsecured loan rather than a mortgage.

You should be aware of the mortgage fees and time involved in getting a mortgage.

Get an equity release product if you are over 55

If you own your house outright and you want a loan you could also potentially get an equity release product if you are over 55 years of age.

You could get a:

Home reversion plan

A lifetime mortgage

A retirement  interest-only mortgage

You should seek legal and independent financial advice before doing this.

FAQs on the question “  I own my house outright can I remortgage  “

Below are some of the most frequently asked questions about the question “   I own my house outright can I remortgage “.

Can you get a mortgage on a paid off home?

Yes, you can get a mortgage on a home where a mortgage has already been paid off on.

There is no restriction on this and it is even more likely that you will get a mortgage on a paid-off home as the owner will hopefully own 100% of the home if they don’t have any secured debts such as home improvement loans on the home.

Can I remortgage an unencumbered property?

Yes, you can get a remortgage on an unencumbered property. An unencumbered property is simply a property which is mortgage free.

You can get a remortgage on an unencumbered property. This may be difficult if you have other secured debt on the property.

What happens when you remortgage your house?

When you remortgage your house the mortgage lender will either give you cash if you are extracting equity.

If you are using the remortgage to pay off a previous mortgage then the mortgage lender will pay this money to the current mortgage lender and settle the mortgage account.

You will then open a new account with the remortgage lender and begin making your agreed monthly remortgage payments.

Can you borrow money against your home?

Yes, you can borrow more money against your home. This is known as a further advance.

Most mortgage lenders will have a cap on how much more money you can borrow against your home. You may also be able to borrow more money against your home with a secured loan.

How soon can I remortgage after buying a house?

You can get a remortgage as soon as 6 months after buying a house but this is all dependent on the mortgage lender and the type of mortgage product you have.

Buy to let mortgage lenders may offer shorter timelines whilst residential mortgage lenders may make you wait longer before you can remortgage.

Can I get a remortgage if I have bad credit?

Getting a remortgage with bad credit may be difficult as mortgage lenders may usually want to lend to borrowers who have a good credit score and have shown a good repayment history on all their previous debts.

There are however mortgage lenders who will offer a remortgage to a borrower depending on what type of bad credit was and what the circumstances were.

If it was a CCJ which was satisfied and is a certain age then some mortgage lenders may be willing to lend. Other mortgage lenders may lend if the CCJ was a maximum amount.

When looking to get a remortgage with bad credit the requirements from different mortgage lenders will differ and a bad credit mortgage broker may be able to assist you in getting a remortgage on a property you own outright.

Bad credit could include:

A CCJ

An IVA

A debt management plan

A default

A bankruptcy

A home repossession

Use a remortgage calculator

If you own your house outright and you are wondering what types of remortgage products you may be eligible for then you should consider using a remortgage calculator to see what types of remortgage deals you may be able to access.

It is important noting that although these calculators will help you by showing what remortgage deals you may be able to access they are by no means a true reflection of your mortgage affordability.

Tell us about you
 
Repayment type
First-time buyers are unlikely to be able to secure an interest only mortgage
Repayment
Interest-Only
 
Property value
£
 
Deposit amount
£
 
Mortage Term
Min 10
Max 40
 
years
 
Initial interest rate
Choose an example below, or enter a rate if you already know it
1.9%
2-years fixed
2.2%
3-years fixed
2.4%
5-years fixed
 
Enter a Different Rate
 
Calculate

 

How to get a remortgage on a house you own outright?

If you want to get a remortgage on a house you own outright then you may want to consider speaking to a remortgage broker who may be able to guide you on your remortgage options.

You may want to consider using an independent remortgage broker to get a remortgage.

remortgage brokers are important as they can access remortgage products from across the whole of the market in some cases. This could be over 11,000 remortgage products. This may have some advantages than going directly to a remortgage lender.

A remortgage broker will look to understand your financial circumstances and then provide recommendations on which remortgage products may be suitable for you.

After giving you these remortgage recommendations, most remortgage brokers will seek your consent to apply for a remortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full remortgage application. Once you have found a home you want to buy or are satisfied with the remortgage offer for your remortgage then the remortgage broker will then look to get you a remortgage offer.

This will come with a key facts illustration document which details out the features of your remortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your remortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the house to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of remortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed the question “ I own my house outright can I remortgage  “. If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.