If you don’t want to, or perhaps aren’t able to, move on up the ladder, a further advance could help you extend your current property so you can stay where you are but benefit from extra space.

Although some lenders offer the opportunity to apply for a further advance, there are often restrictions on how much they will lend, which is often dictated by what you intend to spend the money on. For example, your lender may allow a further advance to take your total borrowing up to 80% of the property’s value if you propose to spend the further advance money to fund home improvements. But it might only allow you to go to 60% if you want the money for other purposes.

How does a further advance work?

If your home is worth £100,000, and you currently have a £50,000 mortgage, your lender may give you a second mortgage of £30,000 for home improvements (taking total borrowing to £80,000, or 80%). However, if you want to release some equity from your home via a further advance for other reasons than home improvements, your lender may refuse to give you as much.

For example, it may only give you a further advance of £10,000, which would take your total borrowings to £60,000. As such, you would then have borrowed 60% of the property’s value.

Costs

It may have been some time since you took out a mortgage with your lender, so you will need to double-check the value of your property. This will involve a valuation of the property, paid for by you. This is so that the lender can make sure any further advance won’t take your overall borrowing over and above the value of your home.