Damian Youell

I’m Damian Youell an experience mortgage broker with over a decade of experience. I’m dedicated to helping clients by offering an efficient and friendly service.

Over the years we have streamlined our systems and procedures and adapted processes to enable us to make the whole process very straight forward and easy for our clients.

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Additional Borrowing on Mortgage

There are a number of possible reasons someone may wish to take out additional borrowing on their mortgage. It could be for home improvements, perhaps a new car, to raise funds for a deposit on a buy to let property or even possibly an important life event such as a wedding. Given that interest rates are usually better for mortgage loans than compared to personal loans and credit cards, many will opt to borrow a further advance from their mortgage lender.

We discuss additional borrowing in more details in this guide.

Post Topics

What is additional borrowing on a mortgage?

How much can I borrow?

Things to consider before applying for additional borrowing

Next steps

FAQs


What is additional borrowing on a mortgage?

Essentially additional borrowing on a mortgage is borrowing more money from your mortgage lender. The further advance could be at a different rate compared to your original mortgage loan but it is still usually a better rate than personal loans and credit cards. Borrowing more from your current lender can save you the hassle of remortgaging or switching lenders.

Personal loans, credit cards and overdrafts are forms of unsecured borrowing as they are not secured against your property whereas additional borrowing on a mortgage is secured against your property so it is important to understand the costs of borrowing and consequences if repayments are not kept up.


How much can I borrow?

Most lenders might stipulate a minimum amount that you can borrow to qualify for additional borrowing on a mortgage. Commonly this could be around £10,000 although requirements can vary lender to lender. If you need to borrow less than the minimum the lender is willing to loan, it might be better to consider other borrowing options.

Generally you may be able to borrow up to 80% – 85% of your home’s value, or 75% for interest-only mortgages but again this will depend on the individual lender and each lender may have different loan to value requirements.


Things to consider before applying for additional borrowing

Just like your existing mortgage loan, the additional borrowing would be tied to your property and if you default on payments, you could be at risk of repossession of your property. Although the lender will assess this, it is important for you to consider before applying if you can afford the added additional monthly payments on top of your original monthly mortgage repayments and other living expenses. Lenders will look closely at your income and outgoings and a stress test will be carried out by the lender to ensure that in the case of interest rate increases that you will still be able to afford the monthly loan repayments.

It is important to have built up equity in your property in order for you to be able to get a further advance. Many lenders will require you to have had your mortgage loan for a period of time before being able to apply for additional borrowing. They will also look at your track record and check you haven’t been behind on any payments.

As always before applying for a loan or even generally as a good habit, it is wise to check your credit score to make sure there are no errors as lenders will use credit history to assess the reliability of a borrower and having a good credit score will strengthen your application.


Next steps

If you are looking to borrow more through your mortgage, get in touch today and a mortgage advisor can let you know if you are eligible to apply and what products are available to you. We can find out for you how much you can borrow and recommend a deal most suitable for you.


FAQs- Additional Borrowing on Mortgage

What is additional borrowing on a mortgage?

This is when you take out an extra loan from your current mortgage provider to pay off other debts such as credit card bills or personal loans. This type of borrowing is usually referred to as ‘additional borrowing’.


Is there any product fee to pay on additional borrowing?

Yes, there may be some additional fee to pay on additional borrowing but first you need to contact an expert mortgage advisers. The adviser will advise you of the costs involved and whether these product fee are worth paying.


How Much Additional Borrowing can I get?

The amount of additional borrowing you can get depends on several factors including:

• Your age and financial situation

• Your circumstances (e.g. number of children)

• Whether you want to buy a new house or move into one already owned

• How long you’ve lived in your current home

• What your mortgage terms are now

• Any outstanding debt you owe, e.g. credit cards or personal loans

• Which lender you choose

• The size of the loan you wish to obtain

There are two types of additional borrowing – secured and unsecured. Secured lending means that the lender takes possession of your property as security for monthly repayments of the loan. Unsecured lending does not involve taking possession of your property. 


Why borrow more on your mortgage?

Borrowing more on your mortgage allows you to clear all of your debts which might include credit card balances, personal loans, overdrafts and car finance. It’s important to note that you should only do this if you’re confident about your ability to meet the repayments. If you don’t think you’ll be able to keep up with them then it could put you under pressure and cause problems down the line. 


Do you need a solicitor for additional borrowing?

No, you don’t need a solicitor for additional mortgage borrowing. However, we strongly recommend that you speak to a specialist mortgage broker who has experience working with additional borrowing. A specialist mortgage broker will be able to guide you through the process and ensure you understand everything about the additional borrowing options available to you.


Can I borrow more Natwest?

Yes, you can borrow more money using your existing mortgage with us. You just need to ask our advisors at NatWest Mortgages for details.It is always better to contact a broker to get the mortgage deals for your application. As brokers have access to many different lenders they can help you compare the best offers and make sure you get the right deal for you. They will also be able to give you advice on the best way to approach additional borrowing.


Are further advances a good idea for paying off debts?

It depends on your individual circumstances and how much you have borrowed so far. For example, if you have taken out a larger mortgage than you originally planned, you may be better off repaying the balance of your mortgage before applying for another advance.


Can I borrow more on a fixed term mortgage?

Yes, you could apply for an extension on your fixed-rate mortgage. This would allow you to take advantage of any interest rate reductions offered by your bank. It would also mean that you wouldn’t have to worry about making monthly payments when mortgage rates were rising.

What happens if I am unable to pay my mortgage monthly payment?

If you fall behind on your monthly payments, your lender will usually try to work something out with you first. We call this ‘prepayment grace period’. During this time, you won’t lose your home but you will still be responsible for the full amount of the mortgage. 


How does additional borrowing work?

You can add extra money to your mortgage in one of three ways:

1) Extra principal (the total sum you want to borrow).

2) Additional repayment (the amount you want to pay each month).

3) Interest-only payments.

The main difference between these methods is that adding extra principal means you are taking ownership of the property. Adding additional repayment or interest-only payments means that you become a co-owner of the property. The other major difference is that interest-only payments don’t affect the overall cost of the loan.