Can I Refinance a House That has Been Paid Off?
The short answer is yes. If you have paid off the original mortgage on your home, then you own it outright. Taking out a new mortgage or refinancing the house can be beneficial, but there are also risks involved.
Remortgaging your house allows you to “borrow” from the equity you have in your property. You can then use this borrowed money to make home improvements, pay off credit card debt, buy a new car, etc.
Refinancing your home can make sense financially, but there are some cons.
The biggest reason not to refinance your home is the risk that is involved. Not only does remortgaging your home tie you to a new long-term financial commitment, but you also run the risk of having the home you once owned outright repossessed if you cannot pay off the new loans. In addition, refinancing a home may result in a higher interest rate over a more extended loan period than a five-year personal loan would. The loan term is another con to consider. If you plan on selling your home within the next few years, a new long-term mortgage may not be the best option.
Discussing the possibility of a home refinance loan with a mortgage broker can help you understand the pros and cons.
How does the process work?
If you already own the property, lenders will look at the new mortgage the same way they assessed the old one. Banks will consider the property’s value, your income, debts you may have, and the housing market in your area. Most lenders allow homeowners to borrow 80% of their own home’s value when they remortgage their house.
Refinancing a home that you already own is possible. A broker can help you decide if remortgaging is the best option for you by considering your financial situation and the plans you have for the future. Mortgage House knows the financial ins and outs of homeownership. A non-bank home mortgage lender, we are committed to finding our clients the best loans and mortgages that fit their needs. Visit our website to learn about our refinancing options.