Raising additional money: further advances, remortgages, second charges, bridging and equity release

Borrowers often need more money after completion. They may want to pay for an extension, help a child onto the ladder, pay off other debts or buy a new home before the old one sells. CeMAP® MRT2 Learning Outcome 1 covers the five main ways to do this. For each, you need to know how it works, which rules apply and when it is the most suitable choice.

Key definitions

Term	Meaning
Further advance	Extra borrowing from the existing lender, secured by the same mortgage.
Remortgage	A new mortgage, usually with a different lender, that repays the existing one. It may include extra borrowing.
Second charge loan	A loan from a different lender, secured on the property behind (after) the first mortgage.
Bridging loan	Short-term secured finance, used as a temporary solution until a longer-term arrangement (often a sale or a remortgage) is in place.
Lifetime mortgage	An equity release loan for older borrowers, normally repaid from the sale of the home on death or a move into long-term care.
Home reversion plan	The customer sells all or part of the home to a provider but keeps the right to live there (Regulated Activities Order, article 63B).

All of these, when secured on the borrower's home, are regulated under MCOB. A regulated mortgage contract is credit to an individual or trustees, secured on land in the UK, where at least 40% of the land is used, or will be used, as a dwelling by the borrower or a related person (RAO article 61(3)).