The whys, wheres and hows of further borrowing

Depending on the housing market, and how much was borrowed when the property was initially purchased, it may be that it has increased in value and there is equity available for withdrawal.

There are a number of influencing factors to contemplate when someone considers releasing equity from their property. Its approval will be subject to the lender’s current lending criteria, and a full affordability assessment being carried. Providing the request is affordable, then generally the applicant can request the additional funds and that the amount be added to the mortgage.


Often referred to as a further advance, there are two main reasons why people might look at releasing equity from their property. One is in order to carry out much needed or more aesthetic home improvements to their home, and the other is to raise the funds to act as a deposit, which will enable the purchase of a second property, usually to be let out.

Some people may feel they want to use the money to repay existing debts. Following the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review in April 2014, lenders now have set criteria they must adhere to when borrowing is being taken to consolidate existing debt. They can only go up to a certain loan to value (LTV). As a mortgage advisor, it is important to make sure a customer looking into debt consolidation knows that the further advance route would mean converting the debt to one secured against their property, and that it is generally repaid over a longer period of time, meaning it could cost more in the long run.

Where and how?

As this is borrowing against your property, as with the main mortgage account, further borrowing is usually obtained by approaching whoever the mortgage is currently held with. Customers may consider remortgaging the whole amount to another provider, as well as the request for new monies if a lower rate was found elsewhere.

As a mortgage advisor, you will establish your customers’ needs and identify what it is they are looking to do. It is important that the customers have considered the following before they look at placing an application:
• Is there sufficient equity available within their current home?
• Have they maintained all of their repayments to date?
• Are they living within their means?
• Can they afford to maintain the payments, including the additional borrowing?



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