Head of Content
Mortgage Advisor & Director
What is additional borrowing?
Additional borrowing means that you increase the amount you owe by remortgaging to borrow more money. There is a limit to what you are permitted to use the additional borrowing for, and you may decide that borrowing more on your mortgage is not the right decision for you.
Can I borrow more on my existing mortgage?
You may be able to borrow more on your existing mortgage, assuming you meet the lender's eligibility criteria, you are borrowing for permitted reasons, and you have enough equity in your home.
What can I use the additional borrowing for?
There are several reasons why you may want to take on additional borrowing. Here are a few of the reasons why people Want to increase their mortgage borrowing.
- Home improvements and extensions
- Divorce settlements
- School charges
- Debt consolidation
- Car purchases
- Other property purchases
When borrowing more significant sums, typically in excess of £15,000, lenders will want to ask more questions and have more detail on the reasons behind the additional borrowing. You'll face less scrutiny when borrowing smaller amounts; however, there will still be affordability assessments to pass.
Other factors affecting additional borrowing decisions
As well as your affordability and overall financial situation, Loan to Value (LTV) and reason for the loan could affect the lender's decision.
For example, if you're looking to use the money for home improvements, this is more straightforward than if you are looking to buy a new car as it is more likely to improve the value of the home, benefiting the lender.
Another factor is the Loan to Value calculation, which is used to work out the equity you have in the home. If you're LTV is already high, your lender may be unwilling to approve an additional borrowing application.
Do you need to provide evidence for additional borrowing?
If you're looking to embark on extensive renovations or borrow significant amounts, you are more likely to be asked for evidence, for example, planning permission applications or quotes from contractors. For smaller values, you may not need to provide any proof.
Are there any alternatives to additional borrowing?
Yes, there are other ways that you may consider to raise the funds you need.
It's worth considering that over time, increasing the amount you owe on your mortgage may not be the cheapest option, even if the rates seem lower. This is because the term of the loan is much longer, so you'll pay more interest over time. You may consider a personal loan or a credit card with an initial interest-free period.
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