When they hear the word “mortgage” most people understandably think of a huge loan secured from a bank for the purposes of buying a home. But what if you already went through that process, completely paid off your mortgage and own your home outright? What are your options when it comes to mortgaging a house you own outright? Do you even have any options? The short answer is “yes”. Below we’ll explain.
The Facts About Mortgaging a House You Own Outright
Before we look into mortgaging a house you already own, let’s think about why someone would want to do that. Here are a few common reasons:
- To pay for home improvements
- To buy a car or motor home
- To pay travelling expenses
- To pay for a wedding or other big event
- To buy land
- To pay off high-interest credit card debt
- To give to a child to cover the downpayment on their house
- To pay a child’s college tuition
Remortgaging Your Home
Of course, the process begins with you filling out an application. As long as you do in fact own the house outright the application is little more than a formality. What’s important are the terms the lender puts on the loan, i.e. the interest rate, size of monthly payments, etc. You may be tempted to go back to your original lender but you may actually get better terms somewhere else.
How Much Can You Borrow?
This will be determined by the value of your home, what you intend to use the money for, and the LTV. The LTV (Loan-to-Value) amount is the percentage of the value of the house you can borrow, and the LTV will differ depending on how you plan to use the money. For instance, home improvements will typically allow you to borrow 80% of the value of the home.
Get in Touch with Mortigo
Mortgaging a house you own outright is a process that requires careful consideration at every stage. It’s strongly recommended you seek the advice of professionals like those at Mortigo before diving headlong into the process. Give us a call on 0808 164 1616.