Can I Borrow Extra Funds on my Existing Mortgage?
Sometimes we need to finance something new, like some home improvements or a new car. If you haven’t saved enough money to finance something you want to do, one option may be to borrow more on your mortgage. In this week’s blog, we will look at how people go about borrowing more on their mortgage to help you judge whether it is a suitable choice for you.
What is extra borrowing on my mortgage?
Extra borrowing involves contacting your lender and requesting more money on your loan, thus increasing the size of your overall mortgage. The additional funds you raise can then be used to pay for things like home improvements, school fees or many other things. There are a few ways you can do this:
A further advance: this is when you borrow additional funds under your existing mortgage lender. It will involve an analysis of your finances to ensure you can afford higher repayments, and the additional money will be secured against your property.
A remortgage: this is when you switch your remaining mortgage debt to a new deal, perhaps with a different lender. You may be able to borrow more money than your current deal, unlocking additional funds to use for whatever you want. A remortgage will be subject to all the usual mortgage assessments.
A second charge mortgage: this is a secured loan whereby your property is used as collateral for further borrowing. It requires you to have built up some equity in your property, and you will need permission from your current lender as well to prove to a second lender that you can afford to repay two separate loans.
Is extra borrowing on my existing mortgage a good idea?
The answer to this really depends on your financial circumstances. The main benefit is that you unlock the funds to pay for whatever you need. But the drawback is that you increase your debt, and that debt is secured against your home. There are alternatives to extra borrowing on your mortgage, such as taking out an unsecured loan, so consider your options carefully.
Before making a decision about this, it is wise to seek independent, expert advice from a mortgage broker. They can offer specialist guidance from a position of expertise, so you can proceed with greater confidence that you are making the most suitable decision.
How can I compare my options?
There are price comparison websites where you can compare some mortgages at home. Here at Mindful Mortgages, we have access to the full market of mortgage products. This includes lenders and deals that are not available to the general public.
We have provided advice and guidance to many clients needing to make decisions about every aspect of the mortgage world and would be happy to help you.
As always, if we can help you in any way on your home journey, whether that’s with your mortgage or arranging insurance for you, then please do not hesitate to get in touch. You can book a call with us here or if you’d prefer, drop us a message and we will get back to you as soon as possible.