Remortgage With Additional Borrowing: How It Works
Remortgaging with additional borrowing means replacing your current mortgage with a new, larger one and taking the difference as cash. People do it to fund an extension or renovation, to clear debts or to raise a deposit for another property. Whether you can do it depends on your income, your outgoings and how much equity you hold. It also depends on what each lender will accept. Below we explain how it works, what it costs and where the risks sit.
TL;DR
- You can borrow more by remortgaging to a new lender, taking a further advance from your current lender, or adding a second-charge loan. Each suits different circumstances.
- Lenders must assess affordability from your income and spending. Having plenty of equity is not enough on its own.
- Borrowing more can mean a higher total cost, especially if you stretch the term, so check the full cost and any early repayment charges first.
- If you are self-employed, a CIS subcontractor or a company director, how your income is assessed varies by lender, so the right lender choice matters.
- Securing debts against your home puts the property at risk if you cannot keep up repayments.
Table of Contents
- How remortgaging to borrow more works
- How lenders decide how much you can borrow
- Remortgage, further advance or second charge?
- Remortgaging for home improvements or an extension
- If you are self-employed, a CIS subcontractor or a director
- Using extra borrowing to consolidate debts
- Costs and risks to check first
- The application process, step by step
- Our perspective
- Talk to a local mortgage broker
- FAQ
- Sources
How remortgaging to borrow more works
You apply for a new mortgage that is larger than your existing balance. The new lender pays off the old mortgage, and the extra is released to you. Your loan-to-value (LTV) is the new loan as a percentage of your home’s value, and it usually affects the rates you are offered. Lower LTV bands generally open up a wider choice.
A simple worked example, using illustrative figures only: a home valued at £300,000 with a £150,000 mortgage is at 50% LTV. Borrowing £30,000 more takes the loan to £180,000, or 60% LTV. That is a modest rise, but the lender still has to be satisfied you can afford the larger payments.
How lenders decide how much you can borrow
Under the FCA’s responsible lending rules, a firm must assess whether you can afford the repayments before it agrees or varies a regulated mortgage. That assessment looks at net income, committed spending and essential household costs. It also has to allow for likely future interest rate rises. The rules say equity or an expected rise in house prices cannot stand in for affordability.
In practice that means a lender will look at:
- your income and how stable it is
- credit cards, loans, car finance and other commitments
- household bills, childcare and school fees
- how the repayments would look if rates rose
MoneyHelper also notes that lenders stress-test extra borrowing against higher rates or changed circumstances. If you want a clear picture before you apply, we offer mortgage affordability assessments and capacity reports for a one-off £199.
Remortgage, further advance or second charge?
There are three main routes to borrowing more against your home.
| Option | What it is | Points to weigh |
|---|---|---|
| Remortgage to a new lender | Replace your whole mortgage with a larger one | Wider choice of deals, but possible early repayment charges, fees and legal work |
| Further advance | Extra borrowing from your current lender | Usually quicker and simpler, but offered at the lender’s rate and criteria |
| Second-charge mortgage | A separate loan secured on your home by a different lender | Leaves your first mortgage in place, but rates can be higher |
MoneyHelper explains that a further advance is extra borrowing from your existing lender, normally at a different rate from your main mortgage. It also says you could switch lender and borrow more, but you should compare any saving with application fees and early repayment charges.
A second-charge mortgage leaves your original mortgage untouched. It can carry a substantially higher rate, and you end up with two loans secured on the property. This can make sense if your current deal is cheap and ending it would be costly. We arrange second charge mortgages and secured loans as well as remortgages, so we can compare the routes side by side rather than push one.
If your fixed rate is close to ending, timing matters. Our guide to checking early repayment charges before your fix ends explains how to plan it.
Remortgaging for home improvements or an extension
Many lenders will lend extra for renovation work, and a kitchen, bathroom or extension is a common reason. Lenders tend to ask what the money is for. Expect to be asked for a description of the work, and sometimes quotes or plans. Larger projects that change the structure or footprint of the property can be treated differently from cosmetic work, so tell your adviser the full scope early.
A few practical points:
- Get quotes before you apply, so you borrow what you need rather than a rounded guess.
- Allow for overruns. A small contingency is easier to include now than to add later.
- Check whether planning permission or building regulations approval applies, as a lender may ask about it.
- Ask how the work might affect the property’s value, as that feeds into your LTV.
Help to Buy homeowners have specific rules. Government guidance says additional borrowing may be allowed to make approved structural alterations, repay the equity loan or fund a transfer of equity.
If you are self-employed, a CIS subcontractor or a director
Borrowing more when your income varies is possible, but lenders do not all treat it the same way. Most want to see a track record. Typically that means tax calculations and tax year overviews from HMRC. Limited company directors may be asked for company accounts too, and lenders differ on whether they use salary and dividends only or also retained profit.
If you are a CIS subcontractor, some lenders may assess affordability using your gross CIS earnings, as shown on your CIS vouchers or statements, rather than only the taxable profit on your return. This is subject to each lender’s criteria. It does not increase your actual income, and it does not guarantee a higher loan. Other lenders will average your profit over two or three years instead.
That is why lender choice matters. The same application can look different depending on who assesses it. Our pages on CIS subcontractor mortgages and self-employed and company director mortgages set out how we approach these cases.
Using extra borrowing to consolidate debts
Rolling credit cards and loans into your mortgage can lower your monthly outgoings. But the saving is often because the debt is spread over a much longer term, which can mean paying more in total. Debts that were unsecured also become secured against your home.
The FCA has warned that advisers should assess suitability rather than recommend consolidation just to make affordability work. They should consider longer repayment periods, the consequences of securing debt and alternatives.
Before going ahead, weigh up:
- whether you could clear the debts faster at a higher payment without securing them
- a 0% balance transfer, if you qualify, or a budgeting plan with a free debt charity
- whether a smaller, shorter-term further advance would do the job
- what happens if your income drops
You can remortgage while you have debts. StepChange notes that missed payments can affect your credit file and make a good offer harder to get. For more detail, see our guides on consolidating card debt into your mortgage, the checks behind a homeowner loan to clear debt and debt consolidation with a CCJ.
Costs and risks to check first
Borrowing more is a long-term decision. Before you commit, look for:
- Early repayment charges on your current deal if you leave before it ends.
- Arrangement, valuation and legal fees, and whether they are added to the loan. Adding them means paying interest on them.
- Total cost over the term, not just the monthly payment.
- Rate rises if your deal is variable or will revert after a fixed period.
- Your home at risk: if you cannot keep up repayments, it may be repossessed.
MoneyHelper says the mortgage illustration should show repayments, upfront fees, total cost and the effect of rate rises. Read it before you sign. If you are worried about income protection, we can also discuss life insurance, critical illness cover and income protection alongside the mortgage.
The application process, step by step
- Decide the amount and purpose. Gather quotes if it is for building work.
- Check your position. Estimate your property value, balance and any early repayment charges.
- Gather documents. Typically ID, proof of address, payslips or tax calculations and overviews, bank statements and details of existing credit.
- Get advice and compare routes. Remortgage, further advance or second charge.
- Apply and have the property valued. The lender assesses affordability and credit history.
- Legal work and offer. Your solicitor handles the redemption of the old mortgage and the new charge. A further advance with your current lender usually involves less legal work.
- Completion. The old mortgage is repaid and the extra funds are released.
Timescales vary by lender and case, so ask your adviser for a realistic estimate.
Our perspective
We see two kinds of enquiry. Some people have a clear plan, such as an extension with a quote in hand, and need to find a lender who will assess their income fairly. Others are borrowing to ease pressure from debts and have not yet looked at the total cost. Both deserve the same care.
For self-employed clients and CIS subcontractors, the biggest difference is rarely the property. It is which lender reads the income in a way that fits how the person actually earns. We explain the options, costs and risks plainly, and we will say so if borrowing more is not the right move for you. No lender outcome can be promised, and every case depends on your circumstances and lender criteria.
— Paul McMath CeMAP CeRER
Talk to a local mortgage broker
We are a mortgage and protection advice firm based in St. Leonards-on-Sea, helping clients in Hastings, Eastbourne, Hailsham, Bexhill-on-Sea and across East Sussex and the UK. We look at the market for you, explain the costs and support you from first enquiry to completion. See our remortgage services or contact us to talk through your plans. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
FAQ
Can I borrow more without changing lender?
Often, yes. You can ask your current lender for a further advance, which is extra borrowing usually at a different rate from your main mortgage. It is typically simpler, but compare it with other routes first. Your current lender’s rate and criteria may not be the best fit for you.
Can I remortgage for home improvements?
Many lenders allow it. They usually ask what the money is for and may want quotes or details of the work. The bigger the project, the more important it is to explain it early.
Can I remortgage if I have loans or credit cards?
Yes, but the lender will include those commitments in its affordability assessment. Missed payments can make it harder to get a good offer. If you plan to clear the debts with the new loan, consider the longer term and total cost first.
Do lenders use gross CIS earnings?
Some may, depending on their criteria, while others average net profit across several years. Using gross figures changes how a lender calculates affordability, not what you actually earn. It does not guarantee a higher loan.
Sources
- FCA Handbook: MCOB 11.6 Responsible lending and financing
- MoneyHelper: Increasing your mortgage, getting a further advance
- MoneyHelper: Second charge or second mortgages
- MoneyHelper: Mortgage advice, should you use a mortgage adviser?
- FCA: Second charge mortgages, improving outcomes for consumers
- StepChange: Remortgaging to pay off debts
- GOV.UK: How to remortgage your Help to Buy home and borrow more money
Recommended
- Remortgage to Raise a Deposit: 3 Adviser Checks UK Homeowners Must Do
- Secured Loan vs Remortgage: A UK Homeowner Guide
- Second Charge Bridging Loans: How They Work and Their Risks
- Remortgage Before Your Fix Ends: East Sussex’s Six Month ERC Check
This article provides general information and is not a personal mortgage recommendation. Mortgage availability and eligibility depend on your circumstances and lender criteria. Rates and criteria can change. We will explain any applicable fees before you commit. Think carefully before securing other debts against your home. Consolidating debts over a longer term may reduce your monthly payments but increase the total amount you repay. Your home may be repossessed if you do not keep up repayments
