If you already have your mortgage with us or are considering moving your mortgage to us, you may be able to borrow additional money on top of your current mortgage.
What is Additional Borrowing?
Additional borrowing on your mortgage is also known as a further advance. This is when you borrow more money from your existing mortgage lender, secured against your property, and can be for many reasons, including to fund home improvements, buy another property or to raise extra money. Any additional borrowing will be secured against your property, so you should fully consider this before discussing an application.
What can you borrow?
You may want additional borrowing for a number of reasons, some of the most common are detailed below;
Home improvements is the most common reason for borrowing extra money. With a home improvement advance, you can attempt to increase the value of your property by redeveloping existing rooms such as upgrading your kitchen or bathroom. You may be looking at making your home more suitable to your changing needs by extending and adding extra living space which may be a cheaper alternative to selling and moving to a new home. Borrowing more for home improvements can help increase the value of your home or energy saving improvements, such as double-glazing or a new boiler could save you money as well as add value.
Either way, you can borrow up to 90% loan to value from us to complete home improvements. Where the improvements involve structural alterations we will however limit this to 80% loan to value at each stage of the works. You will need to provide us with estimations for the work needed to be completed to support your application and re-inspections may be required at different stages.
Capital Raising including a Property Purchase, Car Purchase, School Fees
Capital raising is a form of additional borrowing that will allow you to borrow more to fund an investment. This is usually for costly investments, such as a new car or to purchase another property. At The Tipton, we will lend you up to 80% loan to value to raise funds for any reason which isn’t considered commercial (business related). Where you are looking to capital raise to buy a partner out of your existing mortgage we will consider up to 90% loan to value.
While we all want the best for our children, private school fees are often expensive and difficult for many of us to afford. Research by the Independent Schools Council in 2019 showed that private school fees can range from £4,763 per term up to a massive £11,565 per term (including boarding). For this reason, some mortgage lenders will allow you to borrow more on your mortgage to fund these fees.
Transfer of Equity
Where a mortgage has been taken out in joint names, both parties will be responsible for the mortgage, regardless of whether they both still live in the property. Due to this, in the event of a relationship breakdown, many will borrow more on their mortgage to allow them to buy the other party out of the mortgage/property. This results in the property and mortgage being held in sole name going forward.
Consolidating debt involves taking out new credit to repay existing credit. Extra costs can be involved, and to understand the risks it’s important to get impartial advice before going ahead. Debt consolidation is not right for everyone therefore it is important to check all the options that are available to make sure you are making the right choice for your circumstances.
Further information can be explored at www.moneysavingexpert.com/mortgages/move-debts-to-mortgage/. Please note, this is not an option we will consider at The Tipton.
In order to borrow more on your existing mortgage, you will need to satisfy your lender’s affordability assessments, as you would have when you originally applied for the mortgage. Your Mortgage Adviser will assess your income and outgoings to determine the amount of additional borrowing you can apply for. The amount you can borrow will also be restricted by each lender’s lending criteria, which will limit additional borrowing to a set loan to value (a percentage amount of borrowing in comparison to the value of your property).
What proof do you need to borrow more on your mortgage?
In order to apply for additional borrowing on your mortgage, your lender will require certain documents from you. At the Tipton, we require:
- Proof of income (in the way of payslips and P60's or self-assessment tax returns);
- Bank statements;
- A new credit check; and
- Quotes for any home improvements.
What fees are involved?
Fees will vary from lender to lender. At the Tipton, a number of fees will apply, listed below:
- Administration fee: We charge a £100 administration fee. This can either be paid at completion (when you receive the additional funds), or you can add it to the amount you’re borrowing.
- Telegraphic transfer fee: There is a £25 fee payable and this covers the cost of sending the funds to your account. This will be deducted from the loan amount sent to you, and will be charged at each release of funds.
- Revaluation fee: Dependent on how much you are looking to borrow against the value of your property (loan to value), we may need to send a valuer out to revalue your property. If this is a requirement, there will be a fee of £80 charged per valuation required.
- Product fee: Some of our mortgage products will include a product fee. Your Mortgage Adviser will go through an advised process with you and explain any fees applicable.
How do I apply with the Tipton?
In order to apply for additional borrowing with the Tipton, you will need to complete a Decision in Principle form. You can find this by clicking here, or by arranging an appointment with one of our Mortgage Advisers. Appointments can be completed over the phone, or in any of our branches. To book an appointment, please complete the contact form, by clicking here. The Decision in Principle process will allow our Advisers to complete an overview of your circumstances, to understand if we are likely to be able to support your application – full underwriting and approval will still be required.
Once you Decision in Principle has been agreed, one of our Mortgage Advisers will book a full advised appointment with you, where you can submit your application. During the appointment, they will provide you with mortgage advice and recommend a product and term best suited to your circumstances and needs. Once you’ve happy with this, you will need to sign and return the completed application shared by your Adviser, alongside any additional documentation requested.
It is as this point your application and supporting documents will be provided to our Underwriting Team. They will review your application in detail, to decide if we are able to lend to you.
Once our Underwriters are happy you meet our criteria, an Additional Borrowing Offer will be sent to you. It is important you carefully read the offer and return the signed copy. The Society will then arrange to send your additional borrowing to you, via your nominated bank account.
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