A further advance is an additional loan agreed with your lender that is tacked onto your existing mortgage. It is a loan taken out by the borrower after the main loan has been completed. The loan is secured against the property just as the mortgage is.
A loan of this kind can be taken out at any stage following the completion of the original mortgage. There are several reasons why this might be a good option:
- Your existing lender is offering a competitive interest rate for a further loan
- You are happy with your existing mortgage and do not wish to remortgage your property
- You are happy with your existing lender and have no desire to change
Some people think remortgaging and further advances are identical. They are not. With a further advance, you are retaining your current mortgage and obtaining a further loan from the same provider. Typically, you’ll get a different interest rate for the new loan, which could be higher or lower than the one connected to your mortgage.
Such a loan is still secured against your property, however. This means you should always think carefully about why you need the loan and the importance of diligently paying it back. Some people seek an advance to find the deposit to purchase a second property, perhaps a holiday home or a rental property for example. Others use the advance to fund home improvements that may end up increasing the value of the property. A further advance is also sometimes termed a mortgage advance, but both mean the same thing.