Further Advance Mortgage

A further advance mortgage is used to release capital from your property by taking out a second mortgage deal with your current provider.

A further advance mortgage will allow you to borrow more money against your home allowing you to pay for home improvements, a divorce/separation pay off, repaying debts such as credit cards or personal loans, or a large purchase such as a car.

Your mortgage lender will most likely ask why you are looking to raise the additional money, this might be one or more of the reasons above or something else.

It’s important to note that there are various alternatives to taking out further advance mortgage so it’s always important to explore your options with us.

This is how further advance mortgages work:

The existing part of your mortgage, usually the biggest with most clients, will be on a certain deal and then your new part will be on a different rate and deal. In the future, once both deals have expired, we can look at a remortgage to combine both parts together.

If possible, it’s best to try and get both deals ending around the same time as this makes a future remortgage easier and will save you money on interest payments.

Usually, the right advice is not to sign up to a product transfer mortgage and to pay your lenders standard variable rate on the first part until second part is coming to an end. A good mortgage broker, like us, will explore all your options here to minimise the amount of interest that you pay.

The advantages of a further advance mortgage are:

1. It’s quick! We can usually get you approved within a couple of weeks providing everything fits.
2. No legal process. Usually, there is no legal process involved with a further advance mortgage.
3. Lower interest rates. Depending on what you are looking to do with the money, taking a product transfer could work out cheaper than taking out a large personal loan etc.
4. Early redemption Fees. You will save paying your early redemption charges on your existing mortgage if you need to raise money against your property quicky.

The disadvantages of a further advance mortgage are:

1. Paying too much interest. There will be better deals available on the open market resulting in you paying less interest. You’ll be paying two different rates, one for your existing mortgage and one for your new further advance.
2. Different product end dates. This is common, the closer you can get the dates aligned the better and the more money you’ll save.
3. Arrangement fees. Usually there will be fees associated with taking out a new mortgage deal with your existing lender. These might be several hundred pounds.
4. Equity. You’ll need a fair amount of equity in your property to be considered for a further advance mortgage with your existing lender. Any home improvements that you have completed since you purchased the property will likely be taken into account with your valuation.

You can apply for a further advance mortgage in two ways:

1. You can go direct to your lender; you’ll then be responsible for going through the application process.
2. We’ll take care of it on your behalf and help you overcome any hurdles that you face along the way.

You can book your free, no-obligation product transfer mortgage online today. Speak with one of our mortgage brokers to review your options.

As part of the application process for a further advance mortgage, you’ll be asked to provide documents such as ID, 3 months bank statements, 3 months proof of income such as payslips etc and any ad-hoc ones requested by your lender.

Also, you’ll need to pass a new credit and affordability assessment to prove to your lender that you can afford the additional borrowing.

Depending on what you are looking to raise money for, you might be asked to provide additional documents. For example, if the further advance is for home improvements, quotes for the work being completed by a local reputable company might be requested.

The interest rate on your new further advance mortgage will likely be different from your current deal, higher or lower depending on whether rates have increased or decreased since you took your original mortgage deal.

Our mortgage advice team will help you align these dates as closely as possible to ensure that you are not paying more interest than necessary.

The amount you can borrow on a further advance will depend on how much you currently owe on your mortgage and the valuation of your property. Your valuation might have increased since you first took your mortgage out if you’ve done major home improvements such as added a bedroom or extension.

Your loan to value ratio will be considered by your mortgage lender when applying for a further advance.

Usually, the more equity you already have in your property, the more you will be able to borrow on a further advance mortgage.

Yes, the main reasons why our clients choose a further advance mortgage are:

1. Funding home or garden improvements.
2. Paying off a partner as part of a divorce or separation.
3. Repaying debts such as credit cards and loans.
4. Raising a deposit to purchase another property.
5. Buying a car or another big purchase.

The fees associated with a product transfer mortgage will differ from lender to lender. Usually, the fees are no more than a few hundred pounds.

Our mortgage advisors will clearly explain the fees associated with your mortgage lender. Also, there are alternative products to consider before applying for a further advance mortgage.

The further advance is with the same lender as your original mortgage, a secured loan is with a different lender.

A secured loan (sometimes called a second charge mortgage) works in the same way as a further advance and should always be considered when wanting to borrow more money on your property.

Your existing mortgage lender will hold the ‘first charge’ of your property, and your new secured loan provider will hold the ‘second charge’. As the second charge lender is taking on additional risk that in the event of repossession they won’t be repaid, their rates are usually slightly higher.

It’s worth seeking remortgage advice to compare what rates are being offered by your existing lender to what is available by the way of a secured loan elsewhere.

The alternatives to a further advance mortgage are:

1. A remortgage, although, any early redemption charges, costs and interest rates will need to be considered.
2. A secured loan, this is a second mortgage on your property with a different lender.
3. Unsecured credit such as personal loans and credit cards.
4. Bridging finance, designed for shorter term lending usually for a property purchase or renovation project.
5. Borrowing money from family/friends.
6. The above alternatives will depend on both your personal situation and why you need to raise the additional funds.

If you are over the age of 50, we have an independent range of later life products available for both purchases and remortgages. Our products include retirement interest only mortgages, lifetime mortgages and equity release mortgages.

Yes, possibly. It’s usually possible to get a further advance mortgage with bad credit. However, you’ll have to pass a new credit check and provide proof of income again when applying for the additional funds.

If you have had credit issues, providing that your mortgage has always been paid on time, your lender might take a more sympathetic view on your application. Our mortgage advice team will help you here get the best deal.

Once both parts of your mortgage deal have come to an end, we’ll hopefully be able to help you with a remortgage with bad credit to combine your borrowing.

It’s relatively quick. Providing that you work with us and can provide us with all of your documents when requested, the process if often less than a few weeks.

Providing everything runs smoothly and our mortgage advice team help you over any hurdles we meet along the way, you’ll usually receive your money through within a couple of weeks.

Usually not. Your new further advance mortgage will most likely come with early redemption charges like your original mortgage. However, you might be able to make overpayments if you can afford to. It’s best to check which mortgage deal you’re overpaying on, for example, you’re probably best making overpayments on the mortgage deal with the higher interest rate.

Note, any mortgage is designed for long term borrowing. If you are looking for more shorter-term finance, there are alternative products available such as bridging finance or personal loans etc.