Further Advance Mortgage

A further advance lets you borrow additional funds from your existing mortgage lender without needing to switch lenders or alter your current mortgage agreement.

This option can be beneficial for purposes such as home renovations, funding a deposit for a second property, or consolidating debts. However, it's crucial to carefully assess the advantages and drawbacks and evaluate your financial situation before committing to this additional borrowing.

What’s the Difference Between a Second Charge Mortgage and a Further Advance?

The key distinction lies in the lender and structure of the borrowing. A further advance means borrowing additional funds from your current mortgage lender, whereas a second charge mortgage involves borrowing from a different lender, using the equity in your property as security. Importantly, a second-charge mortgage does not alter your existing mortgage arrangement.

In the event of a repossession, the lender of your primary mortgage (first charge) is prioritised for repayment over the second charge lender. Because of this added risk, second-charge mortgages typically come with higher interest rates compared to standard mortgages.

While a further advance may offer a more affordable borrowing option, you could potentially secure even better rates by exploring remortgaging. Each option has its pros and cons, so it’s important to assess your financial situation and goals before deciding.

Pros and Cons of a Further Advance

If you need to borrow additional funds, a further advance allows you to do so with your existing lender without switching lenders or altering your current mortgage. This straightforward option makes it easier to access the money you need, saving you from unnecessary stress and paperwork.

Advantages of a Further Advance

• Quicker access to the extra funds.
• No early repayment charge if your current mortgage rate isn’t close to ending.

Disadvantages of a Further Advance

• A new arrangement fee will apply.
• The additional borrowing will come with a separate interest rate.
• You’ll have two fixed-rate end dates to manage.

Carefully consider these factors before opting for a further advance to ensure it aligns with your financial needs and long-term plans.