Remortgage of an Unencumbered Property 

How do I know if I qualify to remortgage an unencumbered property?

It’s very much to add down to the criteria and affordability with a mortgage lender. Each lender has their own criteria in relation to affordability, income and expenditure.

Everybody has their own individual circumstances, and that’s where we as a broker come in handy – we can do that research work for you.

Can I remortgage a property in poor condition?

The condition of property is important from a mortgage lender’s perspective. They need to know that the property is classed as habitable – that’s the underlying criteria. Usually a functioning kitchen and bathroom are needed.

A lot of properties can be dated and perhaps you wouldn’t necessarily want to live there without doing it up, but at the same time it could still be classed as a habitable property.

Some properties might not be classed as habitable because they’re in a worse condition. You tend to see these types of properties at auction – they need a complete renovation. In this case a conventional mortgage might not work because of the state of the property.

There are still renovating mortgages available. You might have bought cash at auction.
You can do the work to make it nice and then look for a normal remortgage at that point.
You can take advantage of the equity increase from the added value from doing the work.

Once it’s at a good standard, a conventional high street lender would see it as a mortgageable property.

Can I remortgage an unencumbered property if I’m retired?

It really comes down to the criteria and lenders. You can, but it would very much depend on your income.

For instance, if you’ve got a good pension income, not just state pension but a good private pension, it’s certainly possible. How much you can take out of the property, monetary wise, will be down to the pension you receive and any outgoings you have.

Older retired borrowers may also have options of Retirement Interest Only mortgages or Equity Release products to help them release money from their unencumbered property, but to seek professional advice around these more complex options

Can I remortgage an unencumbered property if I’m self-employed or freelance?

Of course. There’s obviously a lot of equity in the property if there’s no mortgage, which is good. Your circumstances will also influence how much might be available.

If you are self-employed or freelance, lenders still need proof of your income to see what you’re earning. When they’re looking at how much they can lend you, your income and your outgoings help them work out the affordability.

They usually take that from your last two years tax returns, which state your annual income. It’s very much about the lenders’ criteria. Some might want one or two years’ proof of income to assess affordability and how much they might lend. But you can definitely look at remortgaging your unencumbered property if you are self-employed or freelance.

Can I remortgage an unencumbered property with a bad credit history?

It really depends on the type of bad credit. I’ve done mortgages with people who have been discharged from bankruptcies, who have had IVAs and who have been in debt management plans.

A lot of lenders will consider bad credit history. We call it adverse credit, and it really depends on the scale and situation. Sometimes there’s a reason behind it – such as a bereavement, a separation or job loss and lenders can be understanding about that.

A lot of lenders are comfortable if it’s historical – so the issue happened over three years ago. After six years, the majority of things are wiped off your credit file. As a brokerage, we have access to many lenders that will consider applicants with bad credit history.

What are the benefits and risks when remortgaging an unencumbered property?

The big benefit is that you’re utilising some of the equity that you have in your property. Mortgage rates are typically lower than most other ways of raising finance which means you’re paying less in interest.

Also, you can potentially raise a lot more money on a mortgage. If you’re doing a bigger project, such as a big extension costing £80,000 to £100,000, you probably can’t finance that with an unsecured loan.

Another benefit is that you can perhaps take it over a longer period of time compared to other finance options. An unsecured loan might be five to 10 years, whereas a mortgage can be far longer – up to 40 years if your age allows.

An important risk to consider is that if you struggle to pay that mortgage for whatever reason, your home is at risk. Obviously, if you don’t have a mortgage on your property, no one can take it away from you. The home is yours.

The biggest risk for anybody with a mortgage is that circumstances change and their home is repossessed. There are ways to work with the mortgage companies if things become difficult.

You’ve both demonstrated how a mortgage broker can help. Is there anything else you’d like to add?

I could talk for hours about different things you could do. With any mortgage, I always recommend getting prepared. If you’re thinking about buying or remortgaging an unencumbered property, make sure you’ve got all your ducks in a row.

Check your photo ID is in date and has the correct address. Are your bank statements going to the correct address? If you’re self-employed, get the accounts finalised, or otherwise gather your latest pay slips and check there are no discrepancies with any of your pay.

Being organised makes it a lot easier for you to remortgage a property. It also makes our job simpler, and we can make sure your application goes through smoothly.

If you’re looking to remortgage a property, get a few valuations to see how much it is worth in the current market. If you want to do some work on the property, get some quotes so you know how much you’re going to need. We normally say you know three quotes will give you a good indication of how much you might need to borrow.

Obviously, mortgage brokers are here to make obtaining a mortgage easy. It can be straightforward if you have good, reliable income, a lot of equity and a good credit history.
However, it’s not always plain sailing.

Our knowledge as a broker is second to none and as a First Time Buyer or someone who’s remortgaging you wouldn’t have the same insights. Our job is to primarily obtain that mortgage for you, but also to save you money and stress. We’re here to remove the worry and make it a smoother, happier process for you.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.

Approved by The Openwork Partnership on 12/03/2025.