As a homeowner, you may have heard of the terms ‘further advance mortgage’ and mortgage advance but do you know what they mean and how they can benefit you? In this article, we will explore these terms and help you understand how they can be useful to you.
What is a Mortgage Advance?
A mortgage advance is a lump sum of money that you can borrow against your property’s equity, using your existing mortgage as collateral. The amount you can borrow depends on the value of your property and the amount of equity you have built up in it. You can use the funds from a mortgage advance for various purposes, such as home improvements, debt consolidation, or to finance a large purchase.
While a mortgage advance may seem like a good option to access extra funds, it’s important to note that you’ll be borrowing more money against your property, which means you’ll be paying interest on a higher amount. Additionally, depending on your lender’s policies, there may be fees and charges associated with taking out a mortgage advance.
What is a Further Advance Mortgage?
A further advance mortgage, on the other hand, is a type of mortgage product that allows you to borrow additional funds from your existing mortgage lender. This option may be available to you if you have already built up a significant amount of equity in your property and have made regular mortgage payments for a certain period. Further advance mortgages are typically offered at a lower interest rate than other types of loans, making them an attractive option for homeowners who need to borrow money.
A further advance mortgage allows you to access additional funds while keeping your mortgage and its associated payments in place. The funds from a further advance can be used for various purposes, such as home renovations, debt consolidation, or to purchase a second property.
Benefits of a Further Advance Mortgage
One of the primary benefits of a further advance mortgage is that it can be a cost-effective way to borrow additional funds. Since the loan is secured against your property, lenders are typically willing to offer lower interest rates than unsecured loans. Additionally, because the loan is an extension of your existing mortgage, you won’t need to go through the entire mortgage application process again, which can save you time and money.
Another benefit of a further advance mortgage is that it can be a flexible borrowing option. You can choose to repay the loan over a longer period, which can help to reduce your monthly payments. Additionally, since the loan is secured against your property, you may be able to borrow more money than you would with an unsecured loan.
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Final Thoughts
A further advance mortgage can be a useful tool for homeowners who need to access additional funds. By borrowing against the equity in your property, you can secure a low-interest loan and enjoy the flexibility of repaying the loan over a longer period. However, as with any type of borrowing, it’s important to carefully consider the costs and risks associated with a further advance mortgage before making a decision. Be sure to speak with a qualified mortgage advisor who can help you evaluate your options and make an informed decision.