What does Further Advance mean?

A further advance implies that you wish to take out an additional loan from your mortgagee. What you firstly have to do, even before contacting your mortgagee for additional loan, is to determine the equity in your home. How is this done? Simply by determining first the real value market of your property and than subtracting the sum of all your debts (loans/ credit card debt/ any fees that you pay/ any contractual obligations implying monthly payments like a car loan for example).

So, if say your home’s real market value at present is £200,000 and your loans sum up a debt of £110,000, which means that you have £90,000 equity left in your home. Certainly there are cases when the outstanding loan is in excess of what the home is worth, plus there is a first and a second charge on your home, the likelihood of being eligible for a further advance from your lender is almost inexistent.

What you usually have to watch out for when you are contracting further advance/second mortgage on your home is firstly that you do it only for very well grounded reasons, and secondly you have to be aware of the fact that the lender will most probably offer you the loan at a much higher interest rate than your first mortgage.