How To Remortgage An Unencumbered Property
Find a qualified mortgage broker – they should have a Certificate in Mortgage Advice and Practice
Prepare the documents youll need for a mortgage application, including bank statements, identification and proof of income in the form of payslips or tax returns
Find out how much youre eligible to borrow without affecting your credit score
Have your broker compare the lenders and banks in the UK and present you with the best options, all while explaining both the pros and cons of the agreement
If then, youre happy to proceed with an unencumbered mortgage application, ask your broker to prepare the paperwork and submit it
From there, theyll manage the process, even chasing up other parties involved with the process to help you meet your completion date
The Alternative Lending Option
If you dont feel like gathering reams of paperwork, alternative lending may offer you an easier option for qualifying, regardless of how many properties you own. Unlike regular mortgage programs, these lenders only look at the rent youll be earning compared to the payment on the property youre financing. If its at a 1:1 ratio or better, youll meet the basic income and DTI approval requirements for a debt-service-ratio loan. For example, if your new mortgage payment is $1,000 and the market rent is $1,000, youd be eligible for financing.
Mortgage banking companies or mortgage brokers typically offer alternative lending options. They may be referred to as no-income, no-asset or NINA loans, because they dont calculate a DTI ratio like a traditional loan and dont require proof of funds for a down payment.
Does The Bank Own Your House
Simply put, yes, you do own your home but your mortgage lender does have interest in the property based on documents signed at closing. … Deed of Trust this document lists the legal obligations and rights of you and the lender. It also states the lender’s right to foreclose on the home if you default on the loan.
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Would A Live In Partner Have Rights To My Property
The rights that a live-in partner will have depends on four things: Beneficial Interest Contractual Agreements Property Law
Beneficial interest is when a partner has contributed financially, or in a value-added way, to the property value. This includes contributing to the house equity, for example through the deposit or mortgage payments.
Family Law is also considered, if the unmarried couple are parents to children, or if the live-in partner is a legal guardian to the homeowners child. The courts might find that the live-in partner has rights to continue staying at the property, or a financial claim to the property.
A contractual agreement, like a Cohabitation Agreement, will also dictate the cohabitation rights that both parties agreed to abide by, in the event of a relationship breakdown or the death of a partner where one partner owns the house.
Finally, as this matter is relating to property, Property Law applies. We wont go cover it here as it is a very detailed subject, but be aware normal housing and property law applies to cohabiting couples too even when one partner owns the house.
How Much Deposit Do I Need To Put Down For A Second Home
Generally, a 15% deposit is enough to secure a mortgage for a second property. However, if you have a larger deposit, youll not only find it easier to take out a mortgage as youll have more to choose from, youll also have access to better rates and possibly be able to have the mortgage on an interest-only basis.
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Free New York Real Estate Attorney Consultation
If you are listed on a mortgage, but not the deed, serious problems may arise if one spouse dies or is unable to pay. Thankfully, this is a relatively easy problem to fix. If you are listed on the mortgage, but not the deed, contact a deed transfer attorney at Moshes Law, P.C. today to help fix this problem and secure the ownership of your home.
What Happens If Your Name Is On The Deed But Not The Mortgage
It is generally okay to have two names on title and one on the mortgage. If your name is on the deed but not the mortgage, it means that you are an owner of the home, but are not liable for the mortgage loan and the resulting payments. If you default on the payments, however, the lender can still foreclose on the home, despite that only one spouse is listed on the mortgage. So while you are not legally obligated to pay the mortgage, someone must pay it to avoid foreclosure. Other issues may arise in this case, such as the unnamed spouse being unable to take tax deductions on interest paid.
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What’s Better: Traditional Mortgage Or Mortgage After Purchase
It’s all debt when it comes down to it. As most investors know, leveraging debt makes a lot of people a lot of money. But it can also ruin millions.
It really comes down to your specific situation. Do you have money in reserves? What is the reason for taking out a mortgage on your house? Can you wait and save instead?
In the end, only you and your financial advisor can make the best decisions on managing your money and debt. Talk to a trusted financial advisor before making any large decisions such as getting a mortgage on a house you already own.
Can I Get An Unencumbered Mortgage If Im Self
If you work for yourself, your income can be seen as less dependable which can raise concerns for lenders who will be focused on how youll make your repayments in the event that you lose work but thats not to say its impossible.
There are lenders in the UK that will provide unencumbered mortgages for freelancers and contracted workers, though they may charge a higher rate of interest versus lenders for workers in permanent employment.
Furthermore, the loan-to-value ratio may be less too, though having an unencumbered property behind you as security can help to reduce the risk of loss to the lender, sometimes allowing you to borrow more under better terms.
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What Is A Second Home Mortgage
A second home mortgage is a mortgage for buying a second home not to be confused with getting a remortgage or second charge mortgage.
Second mortgages are for people who are looking to purchase a second property as a buy-to-let, or a holiday home to rent out.
They might also be coming to the end of making their repayments on the first mortgage and feel comfortable about being able to take on a second home loan.
How Many Mortgages Can I Have On My Home
Lenders generally issue a first or primary mortgage before they allow for a second mortgage. This additional mortgage is commonly known as a home equity loan. Most lenders dont provide for a subsequent mortgage backed by the same property. Theres technically no limit to how many junior loans you can have on your home as long as you have the equity, debt-to-income ratio, and credit score to get approved for them.
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Hire A Real Estate Agent
An experienced real estate agent can save you time and money by helping you find your dream home and by negotiating with the seller on your behalf.
How to get started: Contact several real estate agents and ask to meet with them for a conversation about your needs before choosing one. Someone with knowledge of an area can also tell if your budget is realistic or not, depending on the features you desire in a home, Kruger says. They can also point you to adjacent areas in your desired neighborhood or other types of considerations to help you find a house.
- Before hiring a real estate agent, find out about their track record, knowledge of your desired neighborhood and what their workload is like. You dont want someone who is over-scheduled.
- Agents can refer you to other professionals like home inspectors, contractors, appraisers and title companies however, you should still shop around and compare fees from other professionals.
Mortgage Holder Vs Title Holder
To begin, it is important to understand the difference between a mortgage on a home and title of the home. While they are oftentimes used interchangeable in common conversation, a mortgage and title are not the same thing, nor are they really related. Different individuals can be, and oftentimes are, listed on the mortgage and title.
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I Want To Make Home Improvements Or Repairs
Looking to improve your home by making renovations or repairs? Borrowing against your homes equity with a home equity loan or a HELOC can generate the money you need.
A home equity loan is great if you need an exact amount for a single project. A HELOC is better when completing several projects over the course of many years since youre able to tap your equity as needed.
You can use a cash-out refi for home improvements, too especially if youre interested in getting the lowest interest rate. But again, the drawback is that youll have to finance most of your home value and pay interest over 30 years.
See this comparison of the best home improvement loans for more information.
I Want To Consolidate High
If youve already paid off your first mortgage, you probably have enough equity to pay off all your high-interest debts, like credit card debt or personal loans. This is typically done using a cash-out refinance. You tap your home equity, use it to pay off existing debts, and then effectively repay them to your mortgage lender at a much lower interest rate.
This can be a very smart way to save money on interest, especially when your mortgage interest is tax-deductible. But experts warn that using a cash–out refinance for debt consolidation has risks, too.
Remember that the new loan is secured against your home. So if you run the debts back up and cant make loan payments, there could be a risk of foreclosure. Also, youd be using a long-term asset, the value of your real estate, to pay for shorter-term needs.
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Second Homes And Investment Properties
Once you begin to buy vacation homes or rental properties, youll run into limitations and extra documentation requirements for mortgage financing.
Financed properties: Ask the loan officers when youre rate shopping whether their guidelines allow for more than four financed properties some may not. Conventional mortgage guidelines suggest lenders can approve a mortgage if you own up to 10 financed properties. That total count includes your primary residence and homes with owner financing or hard money business loans.
Non-financed properties: Some lenders may have a limit on how many properties you can own regardless of whether theyre financed. Even if you dont have a mortgage on your property, include it on your application. The lender still has to qualify you by counting the property taxes, homeowners insurance and homeowners association fees against your income.
Understanding Home Equity: What About A Heloc
A HELOC, or Home Equity Line of Credit, is an alternative to the lump-sum payment typically offered by a home equity loan. Instead of fixed terms and a fixed lump sum, you receive a line of credit pegged to a variable interest rate that you can calculate using a HELOC calculator. This offers advantages and disadvantages to the borrower you can borrow what you need when you need it, but the rates will often be less advantageous to you than you would experience with a traditional lump-sum loan.
HELOCs often offer advantages for savvy tax planning and are viewed more favorably than a second mortgage by anyone considering debt, as well. Outside of these notable differences, however, a HELOC offers many of the same limitations, risks, and benefits of a traditional home equity loana failure to repay will lead to foreclosure and the loss of your home.
If a home equity loan doesnt sound quite right to you at this point, read onthere are many other ways to tap the value of your home. The current rising star of home finance is the reverse mortgagethe home equity loans close cousin.
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What Is Mortgage Exit Fee
An exit fee is charged for closing your mortgage account for example, if you switch to another lender or remortgage to another deal with the same lender. But it can also be charged when you just finish paying off your mortgage. Also known as a mortgage completion fee, deeds release fee or exit administration fee.
Can You Claim Benefits If You Own A House
Yes, you can claim benefits if you own a house but you cant usually claim housing benefits.
To claim Housing Benefit you usually have to:
have a low income or be claiming other benefits
be at least 16 years old if youve been in care youll need to be at least 18
have less than £16,000 in savings
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The Bottom Line: Theres A Lot To Learn When You Decide You Want To Own A Home
Becoming a homeowner isnt easy and its certainly not cheap but its worth the effort. Its important to take the time to familiarize yourself with what a mortgage is before you plunge into the market. Ready to take the first step in your home buying journey? Get started on your mortgage approval today! You can also give us a call at 326-6018.
Get approved to buy a home.
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Can I Get A Buy
If youre planning to invest and become a landlord, perhaps for a second income or for income during retirement, you will likely need a buy-to-let mortgage which can typically require larger amounts of equity to be deposited as the risks associated with this type of lending are greater.
Buy-to-let lenders will usually want at least a 25% deposit and the mortgage rates and fees tend to be higher than those for residential mortgages. If you already own a property outright, some lenders may allow you to use the equity you have built up as a deposit for the BTL mortgage.
That being said, youll still need to show the likely rental income on the property, as well as a plan for how youll make your repayments in the event of an interest rate rise or youre unable to find tenants.
Can I Get A Loan On A House Thats Paid For
When you own your house outright, you can use a variety of mortgage loans to borrow against your homes value. Good options to tap your equity at a low rate include cash-out refinancing, home equity loans, and home equity lines of credit .
- Cash-out refinance: In most cases, you can borrow up to 80% of your homes appraised value. Youll repay the loan via monthly payments, just like you did before you paid off your mortgage balance
- Home equity loan: These loans work like a personal installment loan but with your home value serving as collateral. Home equity loans have lower fixed interest rates compared to personal loans
- Home equity line of credit : These loans resemble credit cards because you access money as needed and repay only what youve borrowed. But since theyre backed by your home value, rates are much lower than credit card rates. HELOC rates are typically variable rather than fixed
With any of these loans, you can benefit from your homes value without selling the house.
What Debts Are Forgiven At Death
What Types of Debt Can Be Discharged Upon Death?
- Secured Debt. If the deceased died with a mortgage on her home, whoever winds up with the house is responsible for the debt. …
- Unsecured Debt. Any unsecured debt, such as a credit card, has to be paid only if there are enough assets in the estate. …
- Student Loans. …
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If Your House Is A Shared Ownership
Yes, you can claim benefits if you own a house through the shared ownership scheme. You will be able to claim Housing Benefit or Universal Credit Housing Costs element for the rent and any service charges which are part of your monthly repayments and a Support for Mortgage Interest loan to help with the mortgage interest on your mortgage.
You will usually need to have been on benefits for the past 39 weeks without any breaks to claim Support for mortgage interest.
If you qualify for an SMI loan, you can get help paying the interest on up to £200,000 of your loan or mortgage.
The amount you get is based on a set rate of interest on whats left of your mortgage. Its paid directly to your lender.
Youll need to repay your SMI loan back with interest when you sell or transfer ownership of your home.
How Easy Is It To Get A Second Mortgage
Since the Mortgage Market Review was introduced in 2014, banks have carried out stricter checks on new mortgage applications.
If your current lifestyle allows you to live within your means and you only have a small portion of your income left over each month, then youre unlikely to be able to afford a second mortgage.
Even if you plan to cut back on a few things, banks will make the assessment based on how you currently live and over the last few months.
How can improve my chances of getting a second mortgage?
Tips for applying for getting a second mortgage:
Reduce your spending and cut back on subscriptions and other bills well before applying
Prepare proof that your income can cover two concurrent mortgages
Compare mortgages across the market to find the best deal for you
Make plans for your second home as this will affect your mortgage will you rent it out, move into it, or use it as a holiday home?
Consider trying to repay your first mortgage early
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