What does further advance entail?
You can apply for additional borrowing to increase your total mortgage amount when you choose to remortgage. This option allows you to borrow more money to meet specific financial needs, such as funding home improvements, paying school fees, or covering essential expenses.
Understanding the Application Process
Obtaining additional borrowing is simple, especially with support from trusted lenders or mortgage advisers. They guide you through the application, assess your finances, and determine how much you can borrow based on affordability and available equity.
Pros and Cons of Additional Borrowing
However, it’s important to weigh the advantages and disadvantages before proceeding. On the positive side, you gain access to more funds that can improve your property value or meet financial commitments. Interest rates for additional borrowing are often lower than unsecured loans, making this a cost-effective solution.
On the downside, increasing your mortgage debt means paying interest on the extra amount. This can raise your long-term financial obligations. Evaluating your repayment ability is essential to manage higher payments comfortably.
Key Considerations Before Proceeding
Using your home as collateral also carries risks. If repayment becomes difficult, your property may be at risk of repossession. Having a clear repayment plan and considering alternative options is crucial.
Before proceeding, consult mortgage experts and explore offers from different lenders to find the best deal. Understanding your financial goals and plans can help you make an informed decision. This approach ensures that additional borrowing supports your needs while minimising 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 depends on several factors.
Assessing Your Property Equity
The equity in your property compared to when you first took out the mortgage is an important consideration. Property values often increase over time, so you may have more equity to borrow against.
Evaluating Your Financial Position
Your improved financial position can also increase your borrowing capacity. For example, if your income has risen or your credit score has improved since securing your original mortgage, lenders may be willing to offer a higher loan amount.
Lenders will also evaluate your affordability before deciding how much extra borrowing they can approve. They will review your income, expenses, and other financial obligations to confirm you can manage higher repayments.
Each lender has specific criteria and guidelines for additional borrowing. Speaking to a mortgage adviser or contacting lenders directly can help you understand how much you can borrow. Seeking professional advice ensures you make an informed choice and secure the most suitable mortgage terms.
How do I get additional borrowing on a mortgage?
You have several options to increase borrowing on your mortgage. One option is a “further advance,” which allows you to borrow more money from your current mortgage lender. Many people use this extra borrowing for home improvements or as a deposit for purchasing a second property.
Your mortgage lender will carefully review your financial situation when applying for a further advance. They will assess your income, expenses, and existing debt repayments to confirm that you can manage the higher mortgage payments comfortably.
It is important to understand that any additional borrowing will be secured against your property. This means your home could be at risk if you fail to keep up with repayments. Therefore, you should assess your financial position and ability to handle increased repayments before proceeding.
Before making any decisions about additional borrowing, seek advice from a mortgage adviser or your current lender. They can explain your options and guide you through the process, helping you make a decision that suits 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 common financial decision for homeowners who want to change their mortgage deal with their current lender or a new one. It also allows the borrowing of additional funds by increasing the mortgage loan. If you are considering this option, it is important to understand the implications and make an informed decision based on your financial circumstances.
How Does the Remortgaging Process Work?
The remortgaging process is straightforward, and at MoneySuperMarket, we make it even easier by offering the option of additional borrowing. If you choose to borrow more, we will ask about the amount required and the intended use. This could be for home improvements, consolidating debts, or other purposes such as purchasing a car.
However, borrowing a substantial amount (typically over £15,000) may prompt lenders to conduct a more detailed review of your application. Approval for additional borrowing will depend on the lender’s affordability checks.
Exploring Second-Charge Mortgages
Another way to access funds is through a second-charge mortgage. This is a secured loan that uses your property as collateral. To qualify, you need to have built-up equity in your home. Equity is calculated by subtracting the amount owed on your first mortgage from your property’s current value. This equity acts as security for the loan.
Important Considerations Before Borrowing More
Before borrowing more, assess the pros and cons based on your financial situation. Additional borrowing carries risks since your home is used as security. Missing repayments could lead to repossession, so it is crucial to ensure you can meet the payments.
If you need alternatives, consider unsecured loans. Bear in mind that taking a further advance on your mortgage might affect your ability to remortgage in the future. It could also result in extra fees and a longer process.
When considering additional borrowing, check your home’s current value against your mortgage balance to confirm you have enough equity. It is also essential to ensure you can afford higher repayments to avoid financial difficulties.
During the remortgaging process, we will ask about the purpose of the extra funds. Whether it is for home improvements, school fees, or consolidating debts, having a clear plan for the money is vital.
Lenders often scrutinise applications for large borrowing more thoroughly than smaller amounts. To make the best decision, seek advice from a mortgage adviser and review your financial position carefully before proceeding.
Thank you for reading our “Further Advance | A Thrilling Guide to Additional Borrowing” Stay “Connect“-ed for more updates soon!
