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Equity Release Further Advance

Yes, you are able to do equity release more than once. Taking out a second equity release loan on your current and pre-existing loan is known as a further advance.

With a further advance, you are able to release more funds from your current loan, from your current lender, meaning that your total loan amount will increase.

Whilst you will gain access to more funds this way, taking out a further advance on your equity release loan might not always be the most cost-effective thing to do.

Alternatively, you can opt to entirely replace your equity release loan with a new one that not only repays your lender and the loan, but will also provide you with additional funds.

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Further Advance – Releasing more with your current lender

When you first take out an equity release plan, you might think that your funds will last you forever.

However, lots of people tend to release money and end up spending it before releasing that they need more funds.

In this case, you might be able to release more money from your current equity release provider, whilst remaining on the same equity release loan [1].

In order to receive a further advance, you must seek the advice of an equity release adviser before going to your lender.

You will most likely have to go through the same process as before, and will need to have a home valuation completed on your property.

The terms and interest rates on your existing equity release loan will always remain unchanged and will stay the same.

However, when it comes to your further advance, your interest rate on this amount will likely match the current interest rate of the day [1].

Some people argue that taking a further advance is more costly than taking out an entirely new equity release loan, bigger than your current one and paying off the loan with this new amount.

This would mean that you get access to a range of new equity release loans and interest rates which could be superior to your current one.

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How much could I save by switching to a new equity release plan?

As mentioned above, switching to an entirely new equity release loan could end up saving you some money.

In order to work out if this is the case, then your equity release adviser will need to examine your existing equity release loan.

They will look at your current interest rate, the balance of your loan and whether or not any early repayment charges have been made.

Your equity release adviser will then search the market for a better deal, and will forecast how long this new loan is likely to last and how much this might cost you on current interest rates.

Most likely, they’ll use their very own equity release calculator in order to work this out.

Depending on your specific circumstances and current interest rates, it could end up saving you thousands of pounds over the years.

Please call our 24-Hour Helpline: 0330 058 1579

Can I Choose to Make Partial Repayments on my Further Advance?

Yes, you can choose to make a partial, early repayment on your further advance.

Some people opt to pay off the interest on their further advance in order to keep their final loan amount at bay.

However, if you choose to do so, then you will most likely be charged an early repayment fee [2].

If you are thinking about making a partial early repayment on your pre-existing equity release loan or your further advance, then you should speak to your equity release specialist adviser to work out what might be the best option for you financially.

If you do choose to make monthly repayments to your equity release loan or further advance and then later change your mind, then you can cancel your repayment plan at any time.

Please call our 24-Hour Helpline: 0330 058 1579

When might releasing a further advance make sense?

Lots of people release a further advance so that they can make some home improvements.

Home improvements famously end up being more expensive than they initially set out to be, which is why a lot of people turn to taking out a further advance in order to fund the additional costs of their home improvements [3].

Doing so would also potentially increase the value of your property, which will pay off the loan when you pass away or move into a care home.

Others choose to opt for a further advance to pay for a deposit on a second property.

This could be a great investment opportunity for those who might want an additional income.

For example, you could take out a further advance on your equity release loan (which won’t need to be repaid until after you pass away or move into a care home) and use the money from the further advance to pay for a deposit on a buy-to-let property.

Please call our 24-Hour Helpline: 0330 058 1579

Will I get the same interest rate as I did on my original loan?

If you take out a further advance on a pre-existing equity release loan, or if you take out an entirely new loan, then you will be offered current interest rates rather than your old one.

Depending on what your original interest rate was, and what the current interest rates are, then you could be adding to or reducing your loan.

In order to work out what your new interest rate would be, then speak to a qualified equity release adviser.

As with all equity release loans, your new interest rate will always be fixed, meaning that you will be able to forecast exactly how much your final loan amount will be before even taking out the loan.

Please call our 24-Hour Helpline: 0330 058 1579

What are the fees involved in applying for a further advance?

As with any type of loan, there are always fees involved. With equity release loans, there are a number of set up costs involved.

This involves things such as the cost of an equity release adviser, a solicitor and a home valuation.

When applying for a further advance, these initial set up costs still exist. You will have to pay for an adviser, a solicitor and a re-application fee.

Whilst some of these costs will need to be paid upfront, others can be paid off once you receive your further advance.

Remember as with any type of equity release loan, you will always be charged interest, even with a further advance.

This interest will remain fixed, although will turn into compound interest over the years.

Please call our 24-Hour Helpline: 0330 058 1579

How will releasing a further advance impact my final loan amount?

As with any type of loan, the more you release and borrow then the more you will have to repay.

This is the case for any type of equity release loan, including a further advance. Taking out a further advance will mean that your total and final loan amount will increase significantly.

The total loan amount will include your initial equity release loan, your further advance and the inevitable compound interest that has occurred over the years.

Remember, if you choose to take out a further advance, then you will be placed on the current interest rate of that time.

This could be significantly higher than your previous loan’s interest rate, meaning that your total loan amount will snowball more rapidly.

Please call our 24-Hour Helpline: 0330 058 1579

How to apply for a Further Advance

Applying for a further advance isn’t too dissimilar to applying for a traditional equity release loan.

Below is a step-by-step guide on how to apply for a further advance and what to expect at each stage:

Step 1

The first step to getting a further advance is to speak to a qualified equity release adviser. They will be able to talk you through the ins and outs of how to apply for a further advance and will determine whether or not a further advance is right for you.

Step 2

Step 2 is to agree things with your adviser and read through the Illustration that they will provide you with. This illustration will talk you through the ins and outs of your further advance, including how much you are borrowing, your interest rate and what this will mean to your final loan amount.

Step 3

Step 3 is to arrange a home valuation to come to your home to determine exactly how much your home is worth. Whilst you and your adviser should have a good idea of how much your property is worth, your lender won’t release any more money to you unless they have a recent and accurate home valuation.

Step 4

Once the home valuation has been carried out, your equity release adviser will then process your application with your chosen lender. Your further advance offer of loan will be sent to you, and you will need to complete some paperwork. Your adviser and equity release solicitor should be able to process a lot of the paperwork for you.

Step 5

Typically, the paperwork will take a few weeks to process. Once all of the paperwork has been signed and processed, your solicitor will receive your further advance funds from your lender and they will then transfer them into your account.

Please call our 24-Hour Helpline: 0330 058 1579

Speak to Equity Release Warehouse

If you are considering a further advance, then you should speak to your equity release adviser for more help and advice to apply.

Our team at Equity Release Warehouse are always on hand to offer advice and will never put any pressure on you to make a decision.

You can contact our team today by calling us on 0330 058 1579 or by visiting us online by searching www.equityreleasewarehouse.com.

References

[1] https://static.aviva.io/content/dam/document-library/adviser/equityrelease/pf01962c.pdf

[2] https://www.halifax.co.uk/mortgages/existing-customers/make-a-lump-sum-overpayment.html

[3] https://www.telegraph.co.uk/financial-services/retirement-solutions/equity-release-service/additional-borrowing-on-mortgage-for-home-improvements/

 

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