Getting a Mortgage on an Unencumbered Property

Looking to raise funds on a mortgage-free property? Find out more and how to secure the best rate

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Home Remortgages Getting A Mortgage On An Unencumbered Property
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 15, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 15, 2024

Unencumbered property indicates ownership without mortgages or legal constraints. This status simplifies sales or transfers, offering flexibility and control. The lack of financial burdens, such as loans or mortgages, makes this type of property attractive and straightforward for transactions.

Given this attractiveness and the straightforward nature of dealing with unencumbered properties, sourcing lenders for mortgages on such properties shouldn’t pose too many difficulties. However, as with any home loan, various factors can impact eligibility.

Can you get a mortgage on an unencumbered property?

Yes, you can. In fact, because you own 100% of the property, it actually puts you in a very good position as it indicates to lenders that you’re financially stable, and arranging an unencumbered mortgage should be fairly stress-free. That said, you’ll still need to make sure that you pass the lender’s affordability assessment and eligibility criteria.

You’d also ideally want to keep your loan-to-value (LTV) as low as possible to give yourself the best chance of qualifying for the best interest rate offers.

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Is it a mortgage or remortgage?

Technically, as you’re not replacing a mortgage with another one, unencumbered mortgages are new mortgage deals. However, some lenders will treat them as unencumbered remortgages, and will only give you access to their remortgage range. Yet in reality, the rates available and the process of securing the mortgage will be broadly the same, regardless of what it’s called.

How to calculate your mortgage

Wondering how much your mortgage will cost? Our unencumbered mortgage calculator can help. Just input a few details and get an idea of what your future repayments could be.

Mortgage Repayment Calculator

This calculator can tell you the monthly and overall cost of your mortgage, based on the loan amount, interest rate, and term length.

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Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms

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The monthly repayments on a mortgage would be

The total amount paid at the end of your mortgage term would be

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How to get a mortgage on an unencumbered property

If you’re thinking of getting a mortgage on an unencumbered property there are a few simple steps you can take to make the process much more straightforward. First, make an enquiry with us and we’ll arrange for a specialist mortgage broker to contact you who can help with:

  • Working out how much you want to borrow, what your loan-to-value will be, and establishing a tangible reason for needing the mortgage which will satisfy the lender
  • Optimising your credit reports and preparing all the necessary paperwork for your application
  • Identifying the best mortgage lenders, with the most competitive rates, who have previous experience in this area of lending

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What are the requirements?

Much like with standard mortgage applications, there are strict eligibility criteria that you’ll need to meet and you’ll be expected to pass the lender’s affordability assessment. Your credit history will be scrutinised, as will your income and outgoings, and you’ll need to prove that you can afford to cover the repayments.

However, there’s one factor that’s arguably unique when it comes to unencumbered mortgages or remortgages, and that’s length of ownership – or the length of time you’ve owned the property.

Often only coming into play if you’ve inherited or otherwise been gifted a mortgage-free home, most lenders will stipulate that you’ll need to have owned the property for a minimum length of time, typically six months. However, there are exceptions and some specialist lenders will be able to modify this if you haven’t owned the property for long enough; speak to a broker for an idea of the best lenders to approach in this situation.

What interest rates to expect

The table below provides an indication of the typical mortgage rates currently available.

Lender Product Details
Frosted Rates Image

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We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated May 2024

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.

Which mortgage providers will lend for this property type?

There are plenty of unencumbered mortgage lenders out there. In fact, because the lender is taking on less risk, it shouldn’t be too much of an issue to find the provider – or the rate – to suit your circumstances.

This means you should easily be able to secure a suitable deal through a high street lender – including the likes of Barclays, HSBC, Santander and Virgin Money – though you may find even better deals from a specialist. Just make sure to perform a thorough unencumbered mortgage comparison before you make your decision.

Get matched with an unencumbered property specialist

If you’re looking to mortgage or remortgage an unencumbered property, we can put you in touch with a specialist to help. Our unique broker-matching service will do the hard work for you – just tell us a few details and we’ll introduce you to the advisor who can help secure the mortgage you need. It’s completely free of charge and there’s no obligation; call us on 0808 189 2301 or make an enquiry to get started.

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Yes, though as with more typical mortgage arrangements, you may find it difficult to secure a competitive deal, with rates and terms often less favourable for those with adverse credit. You’ll likely need to approach more specialist lenders and will almost certainly benefit from the experience and support of a broker in this situation.

Yes, in fact, a lot of borrowers take out unencumbered mortgages for the specific purpose of making home improvements or repairs. However, depending on the extent of remedial work necessary, you may need to seek bridging finance rather than a standard mortgage, particularly if it’s completely uninhabitable. Speak to a broker if you need to discuss your options.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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