Further Advance on an Existing Lifetime Mortgage
At Rockhopper Later Life Finance we help customers aged 55 and over who hold an existing lifetime mortgage and want to raise additional capital. There are several routes to consider: accessing any remaining drawdown reserve on the existing plan, applying for a further advance with the existing lender, or switching to a new lender with a larger loan. The right route depends on the existing plan’s features, the lender’s current appetite, and the amount you need.
We work with customers who are:
- Holding a drawdown lifetime mortgage with reserve remaining to access
- Needing capital beyond what the current drawdown reserve can provide
- Considering a further advance with their existing lifetime mortgage lender
- Looking at switching to a new lifetime mortgage provider for a larger loan
- Facing a specific capital need (care funding, family support, home repairs)
- Reviewing their overall lifetime mortgage position several years in
- Advised by the current lender that a further advance is not available
An existing lifetime mortgage often feels like a done deal, with little flexibility if more capital is needed later. In practice there are usually several routes worth exploring, and the right advice can unlock options that may not have been obvious. We work through the available routes and explain what each would cost and achieve.
Accessing an existing drawdown reserve is usually the simplest and lowest cost option where available. If your existing lifetime mortgage has a drawdown facility with reserve remaining, you can typically draw further amounts subject to the lender’s minimum drawdown size (often £2,000 to £5,000) without a fresh application. Interest accrues on the new drawdown from the date it is taken, at the rate specified in the original plan documentation (which may be the original rate or the lender’s current rate for drawdown, depending on the plan).
Accessing drawdown requires mental capacity at the time of the request, or a registered Lasting Power of Attorney. This is a material consideration for customers who have had their lifetime mortgage for some years and are now older. Where capacity has been lost without an LPA in place, accessing drawdown becomes more complex and may require Court of Protection involvement.
Further advance with the existing lender is the next route where drawdown is not sufficient or not available. The lender may offer a further advance application on the existing plan, subject to their current criteria for further lending. This typically involves a re-valuation of the property and a new application process, though usually lighter than a full new mortgage application. The rate on the further advance may be the lender’s current rate rather than the original rate of the main plan.
Switching to a new lifetime mortgage provider is the third route. Where the existing lender cannot offer a further advance, or where the new lender offers materially better terms, a full switch may be worthwhile. The new lifetime mortgage clears the existing one and provides the new required amount. Costs include legal fees, valuation fees, and potentially early repayment charges on the original plan. We work through the cost-benefit on each case.
Early repayment charges on the existing plan are a significant consideration when switching. Modern plans have varied ERC structures (fixed percentage schedules, gilt-linked formulas, etc.), and the cost of early repayment may be substantial in the first few years of the plan. Where ERCs are high, switching may not be worthwhile even if the new terms are better; where ERCs are low or zero (often after year 10 or 15 of the plan), switching becomes more practical.
The purpose of the additional capital matters, and for sensitive uses (debt consolidation, care funding, or gifting with tax implications) we will signpost specialist advice alongside our mortgage recommendation.
The Process
Your first conversation is a relaxed discussion about your existing lifetime mortgage, the additional capital you need, and your circumstances. There is no cost or obligation.
We complete a full fact-find including a review of your existing plan’s features. We research the routes (drawdown, further advance, full switch) and come back to you with a written recommendation comparing the options.
Every case is different. A customer with substantial drawdown reserve remaining is a different case from one who has exhausted their reserve and is several years into a plan, and our advice reflects those differences.
Speak to an Equity Release Specialist
Call 0203 621 5696
Lines open 9am to 5pm Monday to Friday. Alternatively, complete the enquiry form and we will call you back at a time that suits you.