“I own my house outright can I remortgage?” I hear you ask. If you are one of the few (lucky) people who own their house outright and are looking to raise capital against your home, then read on.

Perhaps you inherited a property or maybe you have managed to pay your mortgage off. The question is, can you remortgage?

The answer, in short, is yes. When you hear the word “mortgage” this typically conjures up the scenario of taking out a hefty loan with a bank in order to pay back over time the money you owe the lender – all the while the bank holding your house as a collateral.

How does this work when you own the house outright?

In much the same way really, you approach the lender, and based on various criteria, the bank decides to lend you money, or “remortgage” your property using your property as a collateral.
There are many reasons why you might want to do this. Maybe you have come into financial difficulty or maybe you want to renovate your house or build an extension.

As long as you are looking to use the money for a purpose the lender approves of, you should be ok. The value of the mortgage that you are likely to get approved depends on the value of the property, which makes sense as the mortgage is against the property.

How does the remortgage work?

Upon successful completion of the application, the bank lends you money that you agree to pay off over a set period of time. As the loan is secured on your house, failure to keep up with the repayments could cause the lender to repossess your house. If you have had mortgage on your property before, you could go back to your previous lender. However, the recommended approach is to do some research first and look at some deals. You may well find another lender has a better deal.

When you remortgage your home, you are essentially releasing some of the value of your home as cash. How much Loan-to-value you can release depends upon what you intend to use the cash for. Some common reasons for remortgaging and the LTV (calculated by taking the loan over the value of the house as a % – so a £70,000 loan on a £100,000 valued house is a 70% LTV) include home improvement (80% LTV), buying a car/van (80% LTV), consolidating other debts (80% LTV) or buying a second home/ holiday home (80% LTV). It is always worth checking with the lender in question prior to applying for the mortgage.
Other reasons for a remortgage include:

– buying a property for a family member
– going on a holiday
– buying land
– paying for a wedding or a special event
– helping out a family member or
– paying for university fees

How much can you borrow?

As mentioned above, this is dictated by the value of your home and the purpose of the mortgage. The value of the home is likely to be confirmed by a surveyor during the application process. The second factor is the LTV. It is a good idea to speak with a financial adviser or mortgage broker to find out exactly how much you can borrow.

What do you need in order to remortgage your property?

Some of the main document’s include:

– Address proof
– Last three months bank statements
– Latest P60
– 3 months payslips
– Proof of identity

Apply yourself or through a broker?

The next step would be to find and apply to a mortgage deal or find a broker to do so for you. Which option you go for depends on how much time you have to look for the best deals, your personal circumstances and your understanding of financial jargon. If you are comfortable with financial jargon, have the time and inclination to find the best deal yourself and have no issues with credit, then doing it yourself may be a viable option for you. You may not be able to access as many deals as a broker would (it is their jobs after all) but there is no reason for you to not find a suitable deal.

On the other hand, if you find financial jargon confusing and your financial circumstances are less than straightforward then a broker may be a better option for you.

Think carefully before securing debt against your home, your home may be repossessed if you do not keep up repayments on your mortgage.