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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Further Advance Mortgage

If your home has increased in value, you may be able to take advantage of a further advance from your current mortgage lender but just because you have been approved a mortgage loan previously, it doesn’t necessarily mean you will definitely be approved again, nor is the lender under any obligation to accept you. There are certain lender’s criteria’s to be met before being accepted for a further advance. In this article we will provide you with information about borrowing more against your property.

Post Topics

What is a further advance mortgage?

How to get a further advance mortgage

Next steps

FAQs

 


 

What is a further advance mortgage?

A further advance mortgage is additional borrowing from your current lender and allows you to borrow more money against your home. The interest rate charged on a further advance is usually different to your original mortgage loan.

A further advance can be a useful option for a borrower if they do not wish to remortgage or switch to another lender and the rates offered for a further advance may be more competitive than other types of loans such as credit cards. If you are currently tied into a product then a further advance can allow you to borrow more without facing hefty early repayment charges.

There may be several reasons why a borrower might consider needing a further advance, such as raising deposit for a second property or home improvements.

A further advance loan is secured against your property so if you default on payments, you could be at risk of losing your property. Other types of unsecured loans are not tied to your property so you won’t risk losing your home if you default on payments, although any type of arrears will have a bad impact on your credit score and have an effect in your ability to apply for loans in the future.

 

 


How to get a further advance mortgage

You can apply for a further advance directly with your lender or if you are unsure of the process, you can use an experienced mortgage broker. Generally, you will not be able to apply for a further advance mortgage with your lender in the first six months of starting your original mortgage loan and if you have any mortgage arrears then the lender will not usually accept your request for a further advance especially if it isn’t brought up to date.

The main things your lender will look out for is whether you can afford the higher monthly repayments and your credit score. A good credit history will indicate to the lender that you are a reliable borrower. Having a bad credit score doesn’t mean you have no chances of applying for a further advance, but it will be assessed on a case-by-case basis and how severe your adverse credits are. Lenders will need to be satisfied that you are comfortable with the additional monthly payments and will check your affordability by comparing your current outgoings against your income, in a similar process to when you first applied for your original mortgage loan.

Lenders will also check the current value of your home and whether it has increased so they can assess whether you have sufficient equity in your property to allow you to borrow additional funds against it. The amount you will be entitled to borrow will depend on your personal circumstances but typically lenders will lend up to 85% of the property value.

 

 


Next steps

It might be a good idea to approach a mortgage broker before applying for a further advance, especially if you are unsure if you can qualify. If you apply and are rejected, it could cause your credit score to decline and your credit report will not state the reason. This could create issues when you want to take out further loans in the future as your credit score will have been impacted. A professional advisor will be able to assess your circumstances first before you apply and let you know whether this type of borrowing is suitable for you. A mortgage broker can help you make your application as strong as possible to increase your chances of being accepted for a further advance.


FAQs-Further Advance Mortgage

Does new borrowing have to be on the same term as the existing mortgage?

No, you don’t have to start your new loan on the same term as your existing one. You can choose from a range of different terms including:

• Fixed rate – where the interest rate remains fixed throughout the life of the loan

• Variable rate – where the interest rates change over time depending on the Bank of England base rate

• Step Rate – where the interest rate changes every month based on the Bank of England rate

• Tracker – where the interest rate moves with the market


What happens if I am unable to pay back my loan?

If you become insolvent during the course of your loan, the lender may repossess your home. However, there are many ways to avoid this situation. For example, some lenders offer payment holidays which means you do not have to pay your full monthly repayment until the end of the holiday period. Alternatively, you can contact an independent debt advice service who can help you find alternative solutions to paying off your loan.

If you are struggling to keep up with your repayments, speak to your lender or a financial adviser about options such as reducing your repayments or taking out a consolidation loan.


What can the additional borrowing be used for?

You can use the money to improve your home, buy furniture, furnishings or appliances, pay for essential bills, cover any unexpected costs, or even save towards a deposit for a house purchase. I would recommend going through a mortgage broker. They’ll give you a much better chance of getting approved than just applying directly to a bank.


Increasing my mortgage – what is a further advance?

A further advance is a form of unsecured lending that allows you to borrow more money against your home. It’s similar to a second mortgage, except your existing mortgage doesn’t need to be paid off. In fact, most people get their second mortgages without having to sell their home.

The main difference between a further advance and a second mortgage is that a further advance does not require you to provide evidence of savings or income. Instead, it relies on your ability to meet the repayment obligations. If you’re looking to raise funds for other purposes, a further advance is probably not right for you.


Can we get a further advance on our mortgage?

Yes, but only if you have equity in your property. Equity is the amount of money you still owe after deducting all outstanding debts from the value of your home. The higher the figure, the greater the potential for a further advance.

However, you should check with your lender first. Some lenders won’t allow a further advance unless they believe you have enough equity to justify the risk.


How long can we expect to pay back a further advance?

It depends on how much you borrow. A typical further advance will take around three years to clear, although this varies according to the size of the loan. This is because the interest charged on further advances is usually higher than the standard variable rate.


How do I apply for a green further advance product?

To apply for a green further advanced product, you must be able to show that you have sufficient equity in your home. You also need to be willing to provide proof of income and savings. Your application will then be assessed by one of our underwriters.


Can you add a personal loan to your mortgage?

Yes, you can add a personal loan to a mortgage. Personal loans are available at competitive rates and are often cheaper than credit cards. They’re also easier to manage than credit cards because you don’t have to worry about late payments.

Personal loans come in two forms: secured and unsecured. Secured loans are secured against your home. Unsecured loans are not secured against your home.

Secured loans are normally offered by banks and building societies. However, some non-bank lenders may offer them too.

Unsecured loans are generally offered by high street lenders such as Halifax, Nationwide Building Society, Santander and Yorkshire Bank. These loans are typically available up to £25,000.

Secured loans are normally repaid over an agreed period of time. After this period has elapsed, the loan becomes due and payable.


Why choose to further advance?

If you want to buy something now, but you don’t have enough cash, a further advance could help you out. For example, if you’ve decided to go ahead with a new car, you might use a further advance to cover the cost. Alternatively, you might want to invest in shares or bonds.

You’ll need to repay the loan within 3 years.

You’ll have to prove that you have sufficient income and savings.

A further advance isn’t suitable if you’re planning to move house soon.


What’s involved when applying for a further advance?

When applying for a further advance, you’ll need to complete a simple form. It’s important to remember that you’ll need to provide proof of income and savings .

The application process itself takes around 10 minutes. Once it’s approved, you’ll receive a letter confirming the terms of the agreement.

Once you’ve received the letter, you’ll need to make regular repayments until the loan is cleared for your mortgage product.


Can I get a further advance on my mortgage with a bad credit record?

Yes, you should be able to get a further advance on your mortgage even if you have a poor credit history. The reason why you can still get a further advance is that most lenders allow borrowers who have had previous problems with their credit rating to re-apply for a further advance.

However, there are certain conditions that must be met before you can get a further advance. In particular, you’ll need to be able to prove that you have enough money to meet the repayment requirements.


What is an additional borrowing application on a mortgage?

An additional borrowing application is a request made by a mortgage holder to extend the term of their existing mortgage. This means that they ask permission to increase the amount borrowed beyond what was originally agreed upon.

This type of extension is usually granted if the borrower can demonstrate that they have been unable to pay back all of the original sum that was lent.

For example, if you take out a mortgage worth £200,000, you would normally be expected to repay this sum over 25 years.