What is a further advance mortgage?

Key takeaways

• A further advance is borrowing more money from your current mortgage lender at a potentially different rate.
• Further advance mortgages are commonly used for home improvements, debt consolidation, or buying out a partner.
• They are often faster than remortgaging or switching lenders because you stay with your existing provider.
• Structure: It acts as a separate "sub-account" with its own interest rate and term, running alongside your main mortgage.
• Eligibility: You must pass new affordability and credit checks, and your total Loan-to-Value (LTV) usually cannot exceed 85%.

Further advance mortgages explained

A further advance mortgage is when you borrow extra money from your existing mortgage lender, secured against the equity in your home. Homeowners usually use this additional borrowing to fund home improvements, pay unsecured debts or buy someone out of the property after a separation or divorce.

How does a further advance mortgage work?

A further advance works much like a second, stand-alone mortgage with your current lender. You keep making your usual mortgage repayments, but you’ll also make payments on the new loan, which is typically set at a different interest rate to your main mortgage. Depending on your lender, you can choose to spread the repayments over a long or short term, giving you flexibility to balance monthly cost against total interest paid.

Are further advance mortgages harder to get than a new mortgage?

Further advance mortgages are not necessarily harder to get than a new mortgage. Getting a further advance can often be quicker than applying for a new mortgage or switching to a different lender, since you're working with your existing lender, who already knows your financial history. That said, you'll still need to meet their affordability criteria, which means they'll reassess your finances to ensure you can manage the additional borrowing.

Learn more: What is a remortgage and how does it work?

How much can I borrow with a further advance?

The borrowing limit for a further advance differs from applicant to applicant, as it is reliant on your income (as is the case with a normal mortgage application). Some lenders will only approve a further advance if your Loan to Value (the size of your mortgage loan compared to the value of your home - also known as an LTV) is below a particular figure. Halifax, for example, says that the existing mortgage plus further advance must not exceed 85%.

However, it's also important to note that a further advance can make it difficult to remortgage your property in the future, as it increases your LTV. Usually, the lower your LTV, the wider your choice of mortgage deals.

What is the difference between a second charge and a further advance mortgage?

Further advance:

• Lender: Your existing mortgage provider
• Interest rates: Usually lower (close to standard mortgage rates)
• Process: Simpler; no new legal fees typically

Second charge mortgage

• Lender: A different, specialist lender
• Interest rates: Usually higher (due to increased risk to the lender)
• Process: More complex; involves a second legal charge on the home

Can I get a further advance on my mortgage?

You can usually get a further advance on your mortgage as long as you meet the lender's affordability criteria. They will usually want to know information like what the mortgage is for as well.

1) What is the mortgage for?

When you apply for a further advance loan, your lender will usually want to know what the loan is for, and sometimes they’ll require proof. Each lender will have their own list of acceptable reasons, but these can vary from one lender to another. However, using a further advance to consolidate unsecured debts is rarely recommended because it can turn short-term borrowing into long-term secured debt. Common acceptable reasons include:

• Home improvements (structural or non-structural)
• Buying your property’s freehold or extending the lease
• Consolidate your debt
• Buying someone out of a property
• Buying a second property, such as a buy-to-let investment

Working out whether a further advance is right for you depends on your individual circumstances and goals. This is where speaking with a mortgage broker can really help - our award-winning team of mortgage experts can assess your situation and explore all your options to find the best solution for you.

2) You’ll still need to pass your lender’s affordability checks

When you first applied for your mortgage, your lender checked both your credit record and your affordability to ensure you could manage the repayments. If you apply for a further advance on your mortgage, your lender will assess both of these again - even if your finances have changed very little since you first got your mortgage.

Your lender might also carry out a new property valuation. If the property's value has fallen since you bought it, you might find it harder to get a further advance. 

Learn more: How can I lower my mortgage payments?

3) Your mortgage length can play a role

Most lenders will want you to have had your current mortgage for a set period of time. This can vary from one lender to the next, but it’s usually a minimum of 6 months. If you haven’t had your home for very long, consulting a mortgage broker for advice may be beneficial. You may be better suited to a remortgage, second charge mortgage or a different type of borrowing.

We can help you figure out which option makes the most sense for your situation.

4) Don’t forget to calculate the fees

A further advance can be cheaper than other types of additional borrowing since you won’t have any legal fees, but you may need to pay arrangement fees and booking fees. You should determine how much you'll need to pay before you apply for a further advance.

How to apply for a further advance mortgage

You can get a further advance mortgage by applying directly through your lender, but it’s a good idea to get independent mortgage advice first.

We can help with this. Let us know how much you're looking to borrow and what you'll use the money for, and our team will assess whether a further advance is the right fit for your situation. The team will also explore alternatives such as a remortgage.

How long does it take to receive the money?

If your home’s value has risen since you bought it, a lender can often release extra funds quickly because there’s already enough equity to secure the new borrowing. It usually takes between six and eight weeks for the money to be released from a further advance, but it can vary depending on your lender’s process and how long it takes their underwriters to review your application.

You may need to wait a little longer to receive your advance if the lender wishes to revalue your property. Generally speaking, getting a further advance is usually quicker than applying for a new mortgage.

Does a further advance affect a fixed-rate mortgage?

No, if you have a fixed-rate mortgage, your current mortgage rate will not be affected by a further advance. That’s because your further advance will have a different interest rate and term than your main mortgage. Your mortgage may be on a 5-year fix at 4%, for example, while your further advance may be on a 2-year fix at 6%. Think of your further advance as a completely separate loan that sits alongside your main mortgage.

Do you need a solicitor for a further advance?

No, you don’t need a solicitor for a further advance mortgage, and this is one of the reasons it can be a quicker form of additional borrowing than a remortgage.

Although you don’t need a solicitor, it’s a good idea to talk to a mortgage broker. At Tembo, our specialist mortgage brokers can help you find the best way to borrow against your home and guide you through each step of the process.