What does further advance entail?
When you choose to remortgage, you can apply for additional borrowing, which allows you to increase the total amount of your mortgage. This means you can borrow more money on top of your existing mortgage to fulfil specific financial needs. Additional borrowing can provide the necessary funds if you want to invest in home improvements to enhance your property, pay for your children’s school fees, or address other essential expenses.
The process of obtaining additional borrowing is straightforward, especially when you work with reputable lenders or mortgage advisers. They will guide you through the application process, assess your financial situation, and determine the amount you can borrow based on your affordability and the available equity in your property.
However, it’s crucial to consider the potential pros and cons before proceeding with additional borrowing. On the positive side, you have access to more funds that can be put to good use, such as increasing the value of your property or addressing important financial commitments. Moreover, interest rates for additional borrowing are often lower than those of unsecured loans, making it a cost-effective option.
On the other hand, additional borrowing also comes with some risks and considerations. By increasing your mortgage debt, you will pay interest on the extra amount, which can add to your long-term financial commitment. It’s essential to carefully evaluate your repayment capacity and ensure that you can comfortably manage the higher mortgage payments.
Additionally, borrowing against your property means that your home is used as collateral. If financial difficulties lead to repayment issues, your home may be at risk of repossession by the lender. Thus, having a clear repayment plan and considering alternative financial solutions if needed is essential.
Before deciding on additional borrowing, it’s advisable to consult with mortgage experts and explore various lenders’ offerings to find the best deal for your needs. Understanding your financial goals, affordability, and long-term plans can help you make a well-informed decision and ensure that additional borrowing aligns with your overall financial strategy. By doing so, you can take advantage of the benefits of additional borrowing while mitigating potential risks.
How much more can I borrow on my mortgage?
Determining how much more you can borrow on your mortgage when remortgaging or extending your existing one in the UK is influenced by several key factors. Firstly, the increased equity in your property compared to when you initially took out the mortgage will play a significant role. As your property’s value has likely appreciated over time, you may have more equity available to borrow against.
Additionally, improvements in your financial situation can positively impact your borrowing capacity. For instance, if you’ve experienced a rise in income or improved your credit score since obtaining your original mortgage, lenders may be more willing to offer you a larger loan amount. 
Furthermore, lenders will assess your affordability before deciding how much additional borrowing they can provide. They will consider your income, expenses, and other financial commitments to ensure you can comfortably manage the increased mortgage repayments.
It’s essential to remember that each lender has its own specific criteria and guidelines for determining the amount of additional borrowing they are willing to offer. Consulting with a mortgage adviser or directly with lenders will help you understand your unique borrowing capacity based on your circumstances. Seeking professional advice will ensure you make an informed decision and secure the best possible mortgage terms for your needs.
How do I get additional borrowing on a mortgage?
You have several options available to get additional borrowing on your mortgage. One of the options is a “further advance,” which allows you to borrow more money from your existing mortgage lender. This extra borrowing is often used for purposes such as home improvements or as a deposit for a second property purchase.
Your mortgage lender will thoroughly assess your financial situation when applying for a further advance. They will review your income, expenses, and debt repayments to ensure that you can comfortably manage the increased mortgage repayments.
Understanding that the additional money you borrow will be secured against your property is crucial. This means that your home is at risk if you fail to keep up with the mortgage repayments. Therefore, it’s essential to carefully consider your financial circumstances and ability to meet the increased obligations before proceeding with a further advance.
Before deciding on any additional borrowing, it’s advisable to seek advice from a mortgage adviser or your existing lender to explore the best options for your specific needs and circumstances. They can help you navigate the process and ensure that you make a well-informed decision that aligns with your financial goals.
What are the pros and cons of a further advance?
Considering a further advance on your mortgage comes with its own set of pros and cons that are worth evaluating before making a decision. Here’s a breakdown of the features you should consider:
Pros:
- Quick and Simple Process: The application process for further advance is usually quick and straightforward. In many cases, you can expect approval within a week or so, making it a convenient option for those in need of funds promptly.
- Affordable Interest Rates: A further advance generally offers lower and more manageable interest rates than credit cards and personal loans. This can make it a more cost-effective borrowing option.
Cons:
- Impact on Future Remortgaging: Taking a further advance could impact your ability to remortgage in the future. Lenders may consider the additional borrowing as part of your overall debt and financial commitments, affecting their decision to offer you competitive rates or terms.
- Property at Risk: When you opt for a further advance, you risk your property. If you fail to keep up with the increased mortgage repayments, your home may be at risk of repossession.
- Reduced Flexibility: If the term of your further advance is longer than your existing mortgage, it could negatively impact your financial flexibility. A longer repayment term may mean being tied to the loan for an extended period, potentially limiting your financial options.
Before proceeding with a further advance, assessing your financial situation carefully and considering the long-term implications is crucial. It’s advisable to consult with a mortgage adviser or your lender to understand the potential impact on your financial future and explore alternative options for your specific needs. Doing so lets you make an informed decision that aligns with your financial goals and ensures a secure financial future.
Remortgaging and Additional Borrowing | Weighing the Pros and Cons
Remortgaging is a popular financial move for homeowners looking to switch their mortgage deal, either with the current lender or a new one. The process also offers the option to borrow more money by increasing the mortgage loan. If you’re considering this option, it’s essential to understand the implications and make an informed decision based on your specific financial situation.
The process of remortgaging is relatively straightforward, and at MoneySuperMarket, we make it even more accessible by offering the option of additional borrowing during the process. If you decide to borrow more, we’ll inquire about the amount you require and the intended use, which could be for home improvements, consolidating debts, or other purposes like car purchases.
However, it’s important to be aware that substantial additional borrowing (usually over £15,000) may prompt lenders to ask more detailed questions during the application process. Ultimately, the lender’s decision to approve your application for more borrowing will be based on their affordability assessment.
Another option for accessing additional funds is through a second-charge mortgage, which is a type of secured loan that uses your property as collateral. You’ll need to have built-up equity in your home to qualify for this. To calculate your equity, subtract the amount you owe on your first mortgage from the current value of your property. This equity serves as security for the additional loan.
Before deciding to borrow more on your mortgage, consider the pros and cons based on your financial circumstances. Remember that additional borrowing carries some risks, as your home is used as collateral, and failure to meet repayments could put your home at risk of repossession.
If you need more certainty about borrowing against your home, explore alternative options, such as unsecured loans. Additionally, keep in mind that taking a further advance on your mortgage may impact your ability to remortgage in the future, potentially incurring fees and a lengthier process.
When considering additional borrowing, evaluating your home’s current value in relation to your initial mortgage amount is essential to ensure you have sufficient equity. Additionally, ensure that you can comfortably afford the increased repayments to avoid any potential financial strain.
During the remortgaging process, we’ll inquire about the purpose of the additional funds. Whether it’s for home improvements, school fees, debt consolidation, or other needs, it’s crucial to have a clear plan for using the borrowed money.
Remember that lenders may scrutinise applications for substantial additional borrowing more thoroughly than smaller amounts. To make a well-informed decision, seek guidance from a mortgage adviser and thoroughly assess your financial situation before proceeding.
