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Can I Borrow Money Against My Mortgage?

With high mortgage rates and ever-increasing debt, it can be difficult to take on even more debt. But is there a way to access more money through your mortgage?

If you are a homeowner, you may be wondering how to borrow more mortgage against your property. There are various reasons you may want to do this, such as to fund home improvements, pay off existing debts or invest in other areas of your life.

The good news is that, yes, additional borrowing on your mortgage may be possible. The two main ways of doing so are to increase the size of your current mortgage or to remortgage your home. Alternatively, you could take out a second charge mortgage against the capital you have in your home.

Borrowing more on your mortgage has its benefits but also comes with some drawbacks and risks. It’s important to consider your options and your financial situation before making a decision.

Key Takeaways:

  • Homeowners may be able to borrow more mortgage to release funds, subject to certain criteria and conditions.
  • You could ask your existing mortgage lender for a further advance, remortgage to a new lender, or take out a separate second-charge mortgage.
  • Borrowing more on your mortgage may mean that your monthly payments will increase. It may also take longer to pay off the loan, meaning you pay more interest.
  • Your property may be at risk if you cannot make repayments.
  • Taking out a personal loan may offer a potential alternative to borrowing more on your mortgage.

Understanding Your Mortgage Lending Limit

As a borrower, it is important to understand your mortgage lending limit and how it impacts your ability to borrow more against your mortgage. The lending limit is the maximum amount of money that a lender is willing to loan you based on your financial circumstances and the value of your property. This figure may vary between lenders and is subject to change depending on market conditions and your financial situation.

Several factors may impact your mortgage lending limit, including:

  • Your credit score: A higher credit score is generally viewed more favourably by lenders and may increase your borrowing capacity.
  • Your income and outgoings: If your income is significantly higher than your debts and other outgoings, this suggests that you may be more comfortably able to make larger repayments.
  • Equity in your home: This is the current value of your property minus the amount you still owe on your mortgage. Typically, the more equity you have, the higher your lending limit.

Before you consider borrowing more on your mortgage, it’s essential to understand how your monthly payments will be affected and ensure you can afford the increase.

Strategies for Increasing Your Lending Limit

If you are looking to borrow more against your mortgage, there are some strategies you can use to increase your lending limit:

  • Improve your credit score: This may include paying off outstanding debts, ensuring that you are making payments on time and correcting any errors on your credit report.
  • Reduce your debt-to-income ratio: This can be achieved by paying off outstanding debts or increasing your income if possible.
  • Make home improvements: If you take steps to increase the value of your home, you’ll have more equity and may be able to borrow a larger amount.
  • Consider a joint application: Applying for a loan with a partner or spouse may increase your borrowing capacity, as lenders will take into account both your income and assets.

Understanding your lending limit and taking steps to increase it can help you access additional funds and borrow more mortgage. However, it is important to borrow responsibly and within your means to avoid getting into financial difficulty.

Exploring Additional Borrowing Options

There are several additional borrowing options available for homeowners looking to borrow more on their mortgage. Depending on your circumstances and financial goals, some options may be more suitable than others. Below, we explain how to borrow more mortgage using three different methods and the pros and cons of each.

01. Further Advance

The simplest route is to ask your current mortgage lender for a ‘further advance’. This means borrowing more on top of what you initially borrowed to purchase your home. The additional amount is then added to your existing mortgage balance.

Typically, you will repay this extra amount over the same term as your original mortgage. This means your monthly mortgage payments will increase, so you should consider how this will affect your finances. Alternatively, you could ask to extend your mortgage term, though it will take longer to pay off, and you may end up paying more in interest.

One of the main attractions of a further advance is the simplicity it offers. Since you’re dealing with your existing lender, the process might feel more straightforward and familiar. Moreover, if you’ve been a reliable borrower, your lender might offer you competitive interest rates for a further advance, potentially making it a cost-effective option.

02. Remortgaging

Remortgaging means switching your current mortgage to a new deal. This could be with your existing lender or a different one. Taking out a larger mortgage than you had previously will allow you to release some of the equity you’ve built up in your home.

The primary advantage of remortgaging is the potential to access better interest rates. If mortgage rates have fallen since you took out your original loan, or if your home has increased in value, remortgaging could allow you to borrow more while benefiting from a lower rate.

However, there might be early repayment charges associated with your current mortgage, especially if you’re on a fixed-rate deal. Additionally, the process of remortgaging can be time-consuming, particularly if you’re switching to a new lender.

03. Second Charge Mortgage

A second charge mortgage, often referred to as a second mortgage, is a separate loan that you can take out alongside your existing mortgage. This loan is secured against the equity you have in your home, which means your property acts as collateral.

Second charge mortgages operate independently from primary mortgages, with their own terms, interest rates and repayment schedules. If you’ve secured a good rate on your primary mortgage, a second charge mortgage may be appealing, as it won’t interfere with the original mortgage terms.

Be aware that second charge mortgages often come with higher interest rates as they are considered riskier by lenders. Taking on a second charge mortgage also means managing an additional monthly repayment, so it’s crucial to factor this into your budget.

Benefits and Drawbacks of Increasing Your Mortgage Borrowing

Increasing your mortgage borrowing capacity can provide numerous benefits, potentially helping you to achieve your financial goals and improve your quality of life. For example:

  • Home improvements: Borrowing against your mortgage can provide the funds needed to make necessary repairs or undertake home renovation projects. This can help to increase the value of your property.
  • Debt consolidation: Consolidating debts, such as credit card bills and personal loans, into your mortgage can reduce your monthly payments and simplify your finances. It may also lower your interest rate, saving you money in the long term.
  • Spare cash: You may benefit from having spare cash for large purchases you need to make, such as a new car or a family holiday.

Additional borrowing is not the right solution for everyone, and it is important to consider the risks as well as the benefits. For example:

  • Additional debt and interest to repay: Taking out more credit means that you will either have more payments or a higher monthly payment if you add to your initial mortgage. Extending your existing loan term could also mean you pay more interest overall.
  • Can put your home at risk: Failing to meet your payment obligations can lead to serious consequences, including repossession of your property.
  • Higher debt-to-income ratio: Taking out more credit will increase your debt-to-income ratio. While this doesn’t directly affect your credit score, lenders may still consider this when deciding to approve you for further credit.
  • Additional fees: It is important to make sure you are aware of any additional fees that come along with additional borrowing.

This is why it’s important to always borrow responsibly and within your means.

Alternatives to Additional Borrowing

If borrowing more on your mortgage is not an option, one potential alternative is to take out a personal loan. These are offered by most banks, building societies and various other financial institutions in the UK. The amount you can borrow, the repayment terms and the interest rate may all vary depending on the lender and your financial situation.

Most personal loans are unsecured, so you don’t have to offer up collateral (such as your home). Due to this, however, interest rates may be higher, and there are typically stricter borrowing criteria.

For example, it can be difficult to get approved if you have a low credit score. Some lenders are willing to work with borrowers with poor credit, but the terms of the loan may not be as favourable. It’s worth comparing different loan products to find the best deal.

Struggling to stay on top of your debt repayments? Consolidation Expert may be able to help

At Consolidation Expert, we believe that a poor credit history should not stop you from taking control of your finances. If you are looking to borrow money to consolidate multiple debts, we may be able to help. Our lenders offer consolidation loans ranging from £5,000 to £75,000 and consider a wide range of credit scores.

Apply online today for a free eligibility check.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

Borrowing Money Against Your Mortgage FAQs:

Borrowing money against your mortgage refers to taking out an additional loan on top of what you owe on your mortgage. This can be done through various methods, such as asking for a further advance, remortgaging, or taking out a second charge mortgage. Additional borrowing could provide you with funds for things like home improvements, major purchases or debt consolidation.

Equity is the difference between the current value of your property and the amount you owe on your mortgage. For instance, if your home is worth £300,000 and you have £200,000 left on your mortgage, you have £100,000 in equity. The equity you have in your home can increase or decrease over time, according to property market trends.

A further advance is when you borrow more money from your current mortgage lender. This additional amount is added to your existing mortgage. You will typically repay it alongside your current mortgage, meaning your monthly mortgage payments will increase.

Yes, remortgaging is a common method to release equity from your home. This involves switching your current mortgage to a new deal and borrowing more than your outstanding mortgage balance.

A second charge mortgage, often referred to as a second mortgage, is a separate loan you can take out while keeping your existing mortgage. This loan is secured against the equity in your home.

Additional borrowing may increase your monthly repayments or extend the time it takes to pay off your mortgage fully. There might also be fees involved, and you could end up paying more interest over the loan’s lifetime. If you struggle with repayments, you could be at risk of losing your home.

Eligibility often depends on factors like your credit history, current income, the amount of equity in your property, and your existing mortgage terms. Lenders must conduct an affordability assessment to calculate your ability to repay the additional borrowing on top of your current mortgage.

There may be fees involved when you borrow more on your mortgage. This may include arrangement fees, valuation fees, and potentially early repayment charges if you’re switching lenders or products before the end of a fixed-term deal. Ensure you fully understand the fees before committing to a deal.

Borrowing more money will typically increase your monthly repayments. However, the exact amount will depend on the terms of the new borrowing, the interest rate and the loan duration. You may be able to extend the term of your mortgage to reduce your monthly repayments, though this may mean paying more in interest over time.

The interest rate for the additional borrowing could be the same or different from your current mortgage rate. This may vary depending on a number of factors, such as the lender’s terms, the current Bank of England base rate and the type of borrowing method you choose.

You may be able to borrow more on your mortgage if you are on a fixed-rate deal. However, there might be early repayment charges if you switch products or lenders before the fixed term ends. Check the terms of your current deal and ask your lender for clarification if needed.

Before borrowing against your mortgage, consider the reason for the additional borrowing, the potential long-term costs, the impact on monthly repayments and your financial situation. Compare various lenders, rates and products to find the best deal, and read the terms and conditions carefully. It is advisable to seek professional financial advice to ensure you make an informed decision.

A personal loan could be a suitable alternative to additional borrowing, especially if you need funds quickly or do not wish to secure another loan against your home. However, interest rates might be higher than mortgage rates, and there may be stricter eligibility criteria. If you’re interested in taking out a personal loan for debt consolidation purposes, Consolidation Expert may be able to help.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

Further reading

Read Is it Possible to Consolidate Short-Term Same Day Loans?
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Read Can I Consolidate Holiday Loans with Other Debts?
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Read How Can I Pay Off My Debts Faster?
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