This type of lending from Mortgage Providers is called a Further Advance and you can do this at any time during your mortgage but there are some implications. 

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If you are on a 5-year fixed rate which ends in 3-years and then your boiler for instance, you can request this borrowing even a couple of years into your fixed rate. 

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Usually we'd recommend that you wait until remortgage for this request, however, a broken boiler is urgent situation which needs to be resolved quickly. 

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In these circumstances we would start the same way we would with any mortgage, with an initial discussion to cover your income & outgoings. If you're an existing client we'll catch-up on any changes and we'll need to know why you require the new amount. 

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Lenders will accept many reasons for a further advance, but there are also reasons they will not accept. 

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This can include but is not limited to: 

• Investments 

• Gambling Debts 

• Any Illegal Activity 

• Any Business Purposes 

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The majority of cases I have dealt with are for home improvements or gifted to children to help them get on the property ladder. But within reason, they can be flexible. 

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The application follows the same thread as any mortgage application. The first call is to check your affordability with the lender and make sure that you can afford the total amount of the mortgage along with the additional lending. 

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We'll then look at products and send across our recommendation. The recommendation will be for a product that covers the further advance. 

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This means that your existing product will remain along with all of it's terms and the new lending will be on a completely different product with different terms, I have included an example below: 

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Purchase Price: £500,000 

Existing Mortgage: £200,000 

Further Advance: £50,000 

Total Amount: £250,000 

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Your existing product for the £200,000 may be 4.5% until 31st March in three years 

Our recommendation will be for the £50,000 and just as an example you may have a 2-year fixed at 3.97% that ends August 31st in two years. 

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With no prior thought, you may end up being trapped with a lender and if you wanted to move away, you may be stuck paying an early repayment charge or sitting on the standard variable rate for some time. 

 

So, what we try to do is keep the end of the fixed rate as aligned as possible to allow you freedom to look at the whole of the market at remortgage. This opens up the best opportunity to stay on the best possible rate.

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So, in the example above, depending on circumstances and the lender I might suggest that for the new loan we go for a 2-year fixed rate and then look at a tracker rate with no early repayment charge for the remaining 7-months. This loan size is much smaller and so the impact of variable rate fluctuations will be much less that the original loan amount. Then we'll be able to remortgage all parts of the mortgage together. 

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