If you own your home outright and have adverse credit, borrowing against it can often be possible. Technically it is a new mortgage rather than a remortgage, because there is no existing loan to replace, but people search for it the same way, and lenders assess it in a broadly similar manner: your income, the property’s value, and your credit history. Nothing here guarantees an outcome, and borrowing against a home you own outright is a serious decision.
This page explains how getting a first mortgage on an unencumbered home works, what people commonly use the money for, and how bad credit fits in. If you are considering this to clear other debts and are struggling with payments now, free help is available from MoneyHelper, StepChange and National Debtline.
On this page
In short
- Because there is no existing loan, this is a new mortgage application, assessed like any other for affordability and credit history.
- You start with 100% equity, so the loan to value is entirely set by how much you choose to borrow.
- Lenders commonly ask what the money is for, and consolidating other debts carries particular risks.
- Older homeowners may also want to compare this with equity release, which is a different, specialist product.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
Can you get a mortgage if you own your home outright and have bad credit?
Yes, it can be possible. Because you have no existing mortgage, a lender treats this as a new application rather than a remortgage. It will look at your income and affordability, the property’s value, and your credit history: how recent and serious any problems are, whether they are settled, and how they sit alongside everything else.
Owning outright generally works in your favour, because you start with full equity in the property. The loan to value is then set entirely by how much you choose to borrow, and a lower amount relative to the home’s value generally widens your choice of lenders.
How is this different from a normal remortgage?
A remortgage usually involves an existing lender or product to move away from, sometimes with early repayment charges to consider. Here, there is none of that. Instead, you are a new customer to whichever lender you choose, so the full application and underwriting process applies, including a fresh valuation and legal work to register the new charge against your home.
| Home owned outright | Typical remortgage | |
|---|---|---|
| Existing lender | None | An existing lender and deal to move from or extend |
| Early repayment charges | Not applicable | May apply if you leave a deal early |
| Starting loan to value | 0%, set entirely by how much you borrow | Set by your existing balance against the property’s value |
| Legal work | Registering a new charge for the first time | Discharging the old charge and registering the new one |
General descriptions only. Individual cases vary, and terms depend on the lender.
What can the money be used for?
People borrow against a mortgage-free home for all sorts of reasons. A lender will usually ask what the money is for, partly because some purposes are viewed more cautiously than others.
- Home improvements, often supported by quotes or a schedule of works
- Helping family, such as contributing towards a deposit
- Buying another property, including for a family member or as an investment
- Paying off other debts, which turns unsecured borrowing into a debt secured on your home
- General purposes, where a lender may ask fewer questions but still checks affordability
If you use the money to consolidate other debts, they become secured on your home for the first time, and your home may be repossessed if you do not keep up repayments. Spreading them over a mortgage term can also mean paying more in total. Our page on debt consolidation remortgages explains the costs in more depth.
How does bad credit affect getting a mortgage on an unencumbered home?
Lenders look at the type, age and severity of any credit problems in the same way as on any application, and there is no mortgage payment history on this specific property to help or hinder you, since you have never had one. Our pages on remortgaging with a CCJ, defaults and remortgaging with a low credit score explain how each is generally weighed.
Full equity can help offset some concerns a lender might otherwise have, because a lower loan to value generally widens options. Our guide on how LTV affects a bad credit remortgage explains why, even though the loan here is new rather than a switch.
What if you are older and own your home outright?
Many people in this position are older homeowners, and age brings its own considerations. Lenders set their own maximum age at the end of the term, and pension income is generally assessed alongside any other income. Our page on later-life remortgages with bad credit explains age and term limits in more detail.
Some older homeowners compare a standard mortgage with equity release, such as a lifetime mortgage, instead. These work differently: interest is often added to the loan rather than paid monthly, and the loan is usually repaid when the home is sold, often after death or a move into long-term care. We do not recommend equity release or a standard mortgage over the other. Both need their own specialist consideration, and equity release needs regulated financial advice.
What if a mortgage on your home is not affordable or possible?
If borrowing the full amount you wanted is not affordable, or a lender declines your application, other options may be worth considering.
- Borrowing a smaller amount that fits comfortably within your income
- Waiting until older credit problems are further behind you before applying
- Getting specialist regulated advice on equity release if you are of an age where it may apply
- Staying mortgage free and exploring other ways to raise money, such as savings or selling other assets
- Getting free advice from StepChange or National Debtline if the reason for borrowing is to deal with existing debts
What may affect a new mortgage on a home you own outright
| Factor | Why it matters |
|---|---|
| Purpose of the borrowing | Some purposes, such as consolidating debts, are viewed more cautiously than others. |
| Amount you want to borrow | Sets your resulting loan to value, since you start from full equity. |
| Property value | A current valuation sets what a lender considers the home to be worth. |
| Type and age of credit issues | Recent or unresolved problems narrow the field more than older, settled ones. |
| Income and affordability | Assessed fully, as with any new mortgage application, including a stress test. |
| Age at the end of the term | Each lender sets its own maximum, which can matter for older owners. |
| Employment type | Self-employed income is assessed differently; see our page on self-employed remortgages. |
| Any existing charges | A charging order or other legal charge, if one exists, must be dealt with before completion. |
| Property type and location | Some property types or locations may be viewed differently by individual lenders. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Proof that your home is unencumbered, such as a copy of your title register
- An estimate of your property’s value
- Proof of income and a summary of your regular outgoings
- Your credit reports from Experian, Equifax and TransUnion
- Details of any CCJs, defaults, missed payments or arrangements, with dates
- What you want to use the money for, and roughly how much you need
- Your age, and the age of anyone else who would be on the mortgage
Frequently asked questions
Can I get a mortgage if I own my home outright and have bad credit?
It can be possible. Lenders look at your income, the property’s value and your credit history, much as they would for anyone. Owning outright means you start with full equity, and a lower loan to value generally widens your options, even with adverse credit.
Is this a remortgage or a new mortgage?
Technically it is a new mortgage, because there is no existing loan to replace. It is often searched for and talked about as a remortgage, but the lender treats it as a fresh application, with full underwriting, a valuation and legal work to register the charge.
How much can I borrow against a mortgage-free home?
This depends on the property’s value, your income and affordability, and the lender’s own limits. There is no fixed figure, and any amount you see quoted elsewhere should be treated as illustrative only. An adviser can give you a realistic idea based on your circumstances.
Will bad credit stop me borrowing against an unencumbered home?
Not necessarily. Lenders weigh the age and severity of any credit problems alongside your income and the property’s value. Full equity can help, since a lower loan to value generally widens the choice of lenders willing to consider your application.
What if I am older and own my home outright?
A standard mortgage remains an option, subject to each lender’s maximum age and your income, often including a pension. Some older homeowners also compare this with equity release, a different specialist product that needs its own regulated advice.
Can I use the money to pay off other debts?
Yes, but this turns unsecured debts into borrowing secured on your home for the first time, and your home may be repossessed if you do not keep up repayments. Spreading debts over a mortgage term can also mean paying more in total, so get free advice before deciding.