Mortgage borrowers often have a need to borrow more and there are a few options to do this which we outline below.
We also outline when lenders will and wont allow you to borrow more.
Need to borrow more now?
Options to borrow more on your mortgage
Option one – Remortgage
Raise a new mortgage with a new lender for a larger amount paying off your current lender with the proceeds.
Advantages
In the right circumstances may borrow more at a better rate
Disadvantages
You may have penalties to exit the mortgage rate you have selected with your current lender, new valuation and legal work required
Option two – Further advance
Borrow more from your existing lender
Advantages
Easy and quick, no legal work acquired, valuation rarely required
Disadvantages
Can leave it difficult to move to a new lender cleanly at a later date
Option three – second charge/secured loan
Borrow more from a new lender keeping your existing mortgage in place.
Advantages
Can often be arranged even if your main lender says no to a request to borrow more
Disadvantages
Available mortgage rates are at a slight premium
Acceptable reasons to borrow more on your mortgage
When you borrow more on your mortgage from any lender they will want to know the purpose for borrowing the additional funds. Lenders can be uncomfortable with some reasons to borrow more and below we outline some typical reasons and likely lender reactions.
The majority of mortgage lenders are comfortable with borrowing more for:
- Buy to let
- Buying land
- Buying out a Help to Buy Equity loan (full buy out)
- Buying out an ex partner
- Buying overseas property
- Buying second homes
- Care home fees
- Debt consolidation (up to 75% of valuation)
- Extending a lease on a leasehold
- Extensions
- Gifted deposits for friends/family
- Home improvements
- Lifestyle items (cars, boats, caravans, holidays)
- Medical expenses
- School fees
A few mortgage lenders are comfortable with borrowing more for:
- Buying out Help to Buy equity loans (partial buy out)
- Debt consolidation (up to 85% of valuation)
- Tax bills
A few mortgage lenders are comfortable with borrowing more for:
- Business premises
- Business purposes
- Investment purposes