standard Additional Borrowing on Mortgage

Damian Youell

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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

 

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.

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