Borrowing more on your mortgage (further advances)

A further advance is extra borrowing from the mortgage lender you already have. It releases some of the equity in your property, the difference between what your home is worth and what you still owe on it, as an additional loan that sits alongside your existing mortgage¹. The Bank of England describes this kind of lending as occurring "when existing borrowers increase the size of their current mortgage, with the same lender"². It is one of three main ways to borrow against a home you already own, the others being a remortgage to a larger loan with a new lender, and a second charge mortgage, which is a separate secured loan from a different lender.

It is a real and established part of the market, though a modest one. UK Finance reported that further advances, meaning increasing borrowing without switching lender, accounted for a little over 3 per cent of gross mortgage lending in 2019³. By comparison, around half of people remortgaging to a new lender that year took out extra money at the same time, borrowing on average an additional £50,000³. So borrowing more through your existing lender is the less common route, but it is one your lender may offer without you having to move your whole mortgage elsewhere.

The essential trade-off is the same as for any mortgage. A mortgage is a loan secured against your home, and while you repay it the lender retains a charge (or security) over the property⁴. That security has teeth: if the borrower fails to make continuous repayments the lender can repossess the property⁴. The same rule applies to a further advance just as it does to the original loan.

A further advance is a second loan from your existing lender

The name can be confusing at first, because "advance" on its own is simply another term for your mortgage loan itself⁸. A "further advance" is something different: it is, in the words of debt charity StepChange, "Releasing available equity from your property in the form of a mortgage or secured loan in addition to an existing mortgage or secured borrowing held on your property"¹. In plain terms, you keep the mortgage you have and the lender lends you more on top of it.

Because the loan stays with the same lender, a further advance is not a remortgage. A remortgage moves your borrowing, usually to a new lender and usually to a new deal. A further advance leaves your existing mortgage where it is and adds a second slice of borrowing. The Bank of England's statistics treat this as "other lending", where "existing borrowers increase the size of their current mortgage, with the same lender"².

It is also not a second charge mortgage, though the two are close cousins. A second mortgage, as the Finance and Leasing Association explains, is "just like a regular first mortgage. It also secured on the borrower's property, except that any claims" the second lender has come behind those of the first lender⁶. A further advance keeps everything with one lender, so there is no second lender waiting behind the first. That simplicity is the main practical difference, and it matters if things go wrong, because you are dealing with one firm rather than two firms with competing claims on your home.

Underneath both arrangements is the same basic structure. Mortgages are loans secured against a home, property or land, and the lender retains a charge, or security, over the property until the loan is repaid⁴. If the borrower fails to make continuous repayments, the lender can repossess the property⁴. A further advance increases the amount secured, so it increases what is at stake.

What people use extra borrowing for

The reasons people borrow more against their homes are broadly the same whether they use a further advance, a remortgage or a second charge. The Finance and Leasing Association lists the common uses of second mortgages as renovations, helping family buy a first home, raising a buy-to-let deposit or business investment capital, unexpected bills, easing irregular cash-flow, one-off large items, and loan consolidation⁶. A further advance can serve most of the same purposes, subject to what your own lender allows.

Home improvements are the classic case, and some lenders have products built around them. Newbury Building Society, for example, runs GoGreen further advance mortgages for existing borrowers who want additional borrowing to fund energy efficient home improvements, and to qualify the borrower must use at least 50 per cent of the further advance for one or more energy efficient improvements⁹. That is an example of one lender's terms, but it shows how specific a further advance product can be about what the money is for. More on green mortgages and EPC ratings is covered elsewhere on the site.

Helping family is another frequent driver, and it overlaps with the wider question of how much you can borrow. Some borrowers, particularly those in certain professions, may qualify to borrow at higher income multiples: Which? notes that "Professional" mortgages allow borrowers with specific jobs, such as doctors and dentists, to borrow at a higher multiple, usually aimed at recently qualified individuals¹⁰. Where a further advance is being used to help a family member, some lenders also offer joint borrower sole proprietor arrangements as an alternative structure.

Debt consolidation deserves its own word of caution. Rolling several debts into one loan secured on your home can lower the monthly payment, and National Debt Line notes that consolidation "may help to make your debt more affordable by lowering the monthly payment you need to make"¹¹. But the Debt Advice Foundation is blunt about the arithmetic: "a debt consolidation loan will only increase the amount that you owe", because the refinancing needs to cover the existing debts plus the cost of the new borrowing¹². Spreading payments over a longer period, which a mortgage term naturally does, is precisely what can make the total cost larger even when the monthly figure is smaller¹².

The risks are worth spelling out. StepChange warns that "Interest could be higher than what you are paying now" when consolidating¹³, and that consolidation loans "can actually add to your debt or take longer to pay off"¹⁴. Northern Ireland's official guidance lists the advantages, which include a lower rate of interest, lower monthly payments, a known end date and a single monthly payment¹⁵, but Shelter Cymru sets out the alternatives worth trying first: better budgeting, negotiating reduced rates with existing creditors, checking the rates already offered on existing loans, cards and overdrafts, increasing income or reducing spending, and borrowing from family or friends¹⁶. Free debt advice is available from charities such as StepChange and National Debt Line before any existing debts are secured against your home.

Who can get a further advance: minimums and lending criteria

There is no standard minimum or maximum for a further advance across the market. Each lender sets its own limits, its own minimum and maximum loan sizes, and its own rules about how much equity you must leave in the property. The figures depend on the lender, on the value of your home and on the loan to value the lender will accept, so the only way to find your own lender's minimum is to ask it directly.

What is common to every lender is the assessment. StepChange describes what a mortgage lender bases an application on when someone is looking to borrow more: "Your credit file, The value of your house, and how much you want to borrow"⁵. The same three factors drive a further advance. Your credit file shows how you have managed the mortgage and other borrowing so far. The value of your house, usually established through a valuation or survey, determines how much equity there is to lend against. The amount you want to borrow is then tested against affordability.

Affordability is where the rules bite hardest. Since the Financial Policy Committee withdrew its affordability test recommendation, the detailed rules sit with the FCA's responsible lending framework, but the underlying requirement remains: a lender must be satisfied you can afford the repayments¹⁷. One part of that framework matters directly to further advances. Where a mortgage's interest rate is not fixed for five years or more, the lender must take into account the impact of likely future interest rate rises on affordability¹⁷. So if your further advance is on a shorter fix or a variable rate, the lender has to stress-test whether you could still pay if rates rose.

Your existing deal also shapes what is possible. Most fixed-rate mortgages allow overpayments of up to 10 per cent of the balance each year, and going beyond that can trigger an early repayment charge¹⁸. A further advance does not usually disturb the existing deal in that way, but the lender will look at the whole picture: your payment record, any arrears, your age and expected retirement date, and the remaining term all feed into whether it agrees and on what terms¹⁹. If you are already struggling, a further advance is unlikely to be the answer, and the page on mortgage arrears covers the options that exist instead.

The interest rate on a further advance can differ from your main mortgage

One point that catches borrowers out is that the further advance does not have to carry the same rate as the rest of the mortgage. It is a separate slice of borrowing, and lenders commonly price it separately, often on a different deal with a different rate, a different term or both. Your original mortgage continues on its own terms, and the new borrowing runs alongside it.

The Finance and Leasing Association flags a related risk worth checking before you apply: "A further advance from the existing (first mortgage) lender may result in the borrower losing a preferential interest rate" or paying early repayment charges⁶. In other words, the act of borrowing more can disturb the terms you already have. Ask your lender directly whether taking a further advance affects your current rate or triggers any charges before you commit.

The rules recognise the further advance as its own loan in one specific way. The FCA's rules on how the APR is calculated state that "the APR for the further advance must be calculated in respect of the further advance alone (and any related charges), and not in respect of the total amount borrowed"⁷. That means when you are shown an APR for the extra borrowing, it reflects only that borrowing and its costs, not a blended rate across everything you owe. The page on how the APRC is worked out explains what these figures include.

Two further consequences follow from the rate being separate. First, benefits: if you claim help with housing costs and you increased your mortgage after starting the claim, "you may only get interest payments on the amount you originally borrowed"²⁰, so extra borrowing may not be covered by support that applies to the original loan. Second, risk: the FCA has noted that arrears rates for second charge mortgages are significantly higher than for first charge mortgages²¹, a reminder that additional secured borrowing, of any kind, tends to be taken on by people already under financial pressure, and lenders and borrowers should both treat it with care.

Comparing the options side by side:

Further advances on a lifetime mortgage

Lifetime mortgages, the main form of equity release, work differently from ordinary mortgages, and so does borrowing more on them. The Equity Release Council describes the option plainly: "There is also an option available to increase the amount you have borrowed as and when you want to, up to the maximum limit agreed with the plan provider"²². So on a lifetime mortgage, further borrowing is typically a drawdown facility agreed at the outset, up to a ceiling set when the plan starts, rather than a fresh application each time.

The rules around later-life lending also treat further advances as a distinct transaction. Where the illustration for a lifetime mortgage further advance is issued, an additional section titled "Total borrowing" must be inserted after Section 8 and numbered "9", with the subsequent sections renumbered²³. In practice that means the document you are shown sets out the further advance alongside everything already owed, so the total commitment secured on the home is visible in one place rather than split across separate illustrations.

The paperwork for a further advance on a lifetime mortgage is specific too. Where a lifetime mortgage illustration is issued in connection with a further advance, an additional section titled "Total borrowing" must be inserted after Section 8 of the illustration, with the later sections renumbered²⁴. The point of that section is to show the whole picture: what you owed already and what you will owe after the extra borrowing. The page on the ESIS illustration covers what illustrations must show generally.

Later-life borrowing carries its own risks, including the effect on inheritance and on means-tested benefits, and the compounding of interest if it is not being paid. Those are covered in detail on the pages about the downsides of releasing equity and whether equity release affects benefits and inheritance, and they apply to further borrowing on a lifetime mortgage just as they do to the original loan.

Applying through your lender or a mortgage adviser

The application route for a further advance is the same as for a mortgage generally. The Building Societies Association's guidance is that "You can apply for a mortgage direct to a building society, or other type of lender, or, alternatively, use a regulated mortgage broker to help you"²⁵, and its advice on suitability is to "contact the building society directly, or speak to an independent mortgage adviser, to see what is most suitable for your needs"⁴. Which? makes the same point about approaching lenders: "you'll either need to approach a mortgage lender directly or go via a mortgage broker"²⁶. For a further advance, the direct route usually means your existing lender, since it already holds your mortgage.

The process has a defined regulatory shape. Before an application for a further advance that requires lender approval, FCA rules require the firm to provide you with either an illustration complying with MCOB 5, or an ESIS complying with the European standards, so you have the costs in writing before you are committed¹². That document is the place to check the rate, the fees, the term and the total amount you will repay.

Whether to use an adviser is a genuine choice, not a requirement. A broker can compare your lender's further advance against remortgaging for more or a second charge, and can see deals across the market. The page on mortgage advice, brokers and applying direct explains how advice is paid for and what protections come with advised sales. If you go direct, the lender's own staff can tell you what further advance terms it offers, though they will only recommend their own products, and some lenders are broker-only for certain deals.

Your home is at risk if you cannot keep up repayments

The warning is not a formality. The FCA's prescribed risk warning, which must appear in mortgage illustrations, reads: "Your home may be repossessed if you do not keep up repayments on your mortgage"⁴. A further advance increases the secured debt, so it increases the monthly commitment that has to be met. Macmillan's support guidance spells out the sequence: "Your mortgage lender may start a process to take back (repossess) your home. This may happen if you cannot pay your mortgage"²⁷.

The protection for a home is that the lender cannot simply take it. National Debt Line's guidance is that "If the property is your home, they will normally need a court order to do this"²⁸. Shelter describes the mechanics: "Your mortgage lender has to repossess your home and evict you before they can sell it", which means asking the court for a possession order and getting court bailiffs to carry out the eviction²⁹. GOV.UK confirms the trigger: "If you miss your mortgage repayments and cannot agree a repayment plan, your mortgage lender might start court action to" repossess your home³⁰. The court process differs between England and Wales, Scotland and Northern Ireland.

Two further protections sit alongside the court requirement. Lenders signed up to the government's Mortgage Charter have committed that "a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment"³², a commitment effective from 26 June 2023, and the government publishes data on firms' uptake of the Charter³⁴. And if you receive Support for Mortgage Interest, the payments are a loan secured on your home; if no arrangement is made to pay future mortgage or secured loan payments, "payments to your mortgage will stop and you may begin to run up arrears", and the lender could eventually take court action to evict you³⁵.

The contrast with other secured borrowing shows what the court order is worth. With a logbook loan, "The lender can take your car if you miss payments and build up arrears. They do not need a court order to do this"³⁶. For most business mortgages, such as buy-to-let or commercial loans, the Law of Property Act 1925 gives the lender the right to repossess the property without a court order by appointing receivers³⁷. Your home is the exception: the law puts a court between you and losing it. If you are struggling, free help is available from debt advice charities, from StepChange and National Debt Line, and from Shelter for housing matters, and the earlier you ask, the more options exist.