The Remortgage And The Further Advance: The Difference

The remortgage has become a staple product for many providers out there today because it brings them a lot of revenue and yet the general public does not seem to understand the term fully. They often get the remortgage and the further advance mixed up as a result of poor terminology use by individual providers.

Firstly, a remortgage actually occurs when an individual homeowner moves his or her mortgage from one provider to another. This commonly occurs when their current deal comes to an end and they realise that they can get a better and cheaper deal elsewhere. In doing so, it is possible to borrow the original value of the house and use the excess to purchase a holiday, car, home improvements or consolidate debts. However, this is not the way that most people view a remortgage.

Instead, they commonly believe that the further advance is actually a remortgage. A further advance is a loan that is added on to your mortgage, without actually switching deals or providers. You can therefore pay it off alongside your mortgage but it is actually a loan. As you can see, the two are very different and are not to be confused, lest you get the wrong product for your needs!