When a further advance might make sense

There is an endless list of reasons that you may need a further advance, or it may be the best option for you.

The most common reasons are:

• Deposit for a second home, or a gift to children for their home.
• Debt consolidation
• To fund home improvements

Are further advances a good idea for paying off debts?

They should probably be considered one of the last resorts for paying off debts. This is because debts are usually short term, over a few months or years. However, if you consolidate them into a mortgage, or a further advance mortgage you are usually spreading these debts across a longer time period. This means that you will often pay far more interest by spreading them out.

What are the alternatives to a further advance mortgage?

There are usually many alternatives to a further advance mortgage to consider. It will depend on what you intend to use the funds for. These are some common alternatives and the reason you should consider them instead of a further advance mortgage.

What to consider before you apply for a further advance mortgage

Before you apply for a further advance mortgage you should consider a few things:

• How is your credit? Submitting a new mortgage application will probably involve a hard credit search and this can affect your credit rating. On top of this you may need a good credit record in order to get accepted.
• A further advance mortgage isn’t free. This will probably involve making extra monthly payments to pay it off.
• This will reduce your owned equity in the property. Buy borrowing more you will reduce the amount of equity you own.

Work out how much you can afford

You can use our mortgage calculator to see if you can borrow enough (Just reduce it by the amount of your current mortgage. However, a mortgage calculator is not 100% accurate and you should speak to a mortgage advisor to find out how much you can borrow.

Borrowing for other major purchases

Most other major purchases have their own finance options that won’t be secured to your home. For example cars can be bought using car finance. Securing debt to your home is usually considered a last resort.

Is remortgaging could be an option?

Using a remortgage with another lender rather than a further advance mortgage could be a good alternative. However, you need to factor in potential early repayment fees, new lender fees, and mortgage advisor fees before knowing which is the right option for you.

What is the difference between a remortgage and a further advance?

A further advance mortgage is with the same lender as your current mortgage, and is just the borrowing of additional funds. However, a remortgage involves moving the entirety of your mortgage to a new lender.

Both options have their own pros and cons. It will largely depend on cost, the option that has an overall lower cost is likely to be the best option for most people.

Is further advance the same as equity release?

A Further advance mortgage is not the same as equity release. Equity release is generally a Lifetime mortgage which you pay the interest on until you either die or enter long term care. However, a further advance mortgage generally won’t go past retirement. They are 2 different solutions for 2 different problems.

Further Advance On Buy To Let Mortgage

Some lenders may allow you to do a further advance on a buy to let mortgage. However, not all lenders allow this, especially on Limited company buy to lets.

If you want to know whether your lender will allow a further advance mortgage you need to either speak to your lender, or your mortgage advisor that will be able to find out for you.