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HomeReal-EstateWhat exactly is an unencumbered mortgage?

What exactly is an unencumbered mortgage?

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The mortgage world has a very specific definition of “unencumbered”. It’s the name we use to describe a property that doesn’t have a mortgage. This means there cannot be any loans, charges, or restrictions. If you have paid off your entire mortgage or bought your property in cash, you are free to use your property as you wish.

This is why we refer to an unencumbered remortgage refinance as any remortgage for a home which is ‘unencumbered’ or ‘mortgage–free’. There are many factors that homeowners consider remortgaging their unencumbered assets. One reason could be to move from your current home and not have to sell it.

You might need some capital to fund home improvements projects or invest in a secondary property.

Non-encumbered mortgage lenders

You may be eligible for some great deals if your property is unencumbered. However, some lenders will treat it as a new acquisition and not a renewal. This should not affect your mortgage in anyway, but it will still be the same in principle. You should still be able to comprehend the process of unencumbered refinances before you apply.

Remortgage can be defined as replacing an existing mortgage loan with a new one. Because your property does not have a mortgage, a true “remortgage” is not possible. The processes for unencumbered homes are identical. It is because some lenders still consider it to be a refinance, while others call it a new acquisition. You will have many choices, and a large number of lenders and fees are available to you.

After paying off a mortgage completely or purchasing a property, you have demonstrated to lenders that your financial status is stable. You should therefore be eligible for a mortgage. Think Plutus provides expert advice that will help you to do the job right.

Capital raising on a mortgage free property

If you own your property outright and are not a tenant on the mortgage, it will put you in a solid financial position. It may be financially beneficial for you to obtain a mortgage. However, this will depend on your personal circumstances. You need to think carefully about whether an unencumbered, uninsured remortgage is the right choice for you. Take into account the following factors:

It is a new financial responsibility: you are currently able to live in a house without a mortgage. The new mortgage will represent a new financial commitment. You should understand its implications. Can you afford to pay a monthly additional expense?

Mortgage risk: Mortgages are subject to some risk. You have a home that is secure. Do you really want a new risk in your life? If you are unable to pay your mortgage on time, your home could be lost. Even if financial stability is high, it’s important to not overlook the potential danger.

You reasons: would you like to make improvements to your home. Make an investment in a new property borrow to buy a gift for someone you care about? Financially sound reasons should drive you to get a new loan. A mortgage adviser can help evaluate this element.

Debt: It is a good idea to consider whether you can mortgage an unencumbered property if you already have debts. Your personal situation is the most important thing. A mortgage advisor can give you tailored advice. And remember, there are specialist remortgages to consolidate you.

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