Introduction
We recently helped our customers in Ascot, Berkshire, arrange a £30,000 further advance to fund home improvements while keeping their existing mortgage in place.
Our customers already had a fixed-rate mortgage with HSBC and wanted to borrow additional money to complete improvements to their property. However, switching to another mortgage lender would have triggered early repayment charges of more than £4,000.
We arranged a further advance with HSBC on a five-year fixed rate, allowing our customers to secure the additional borrowing without disturbing their existing mortgage or incurring early repayment charges.
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The Scenario
Our customers were existing homeowners in Ascot who needed an additional £30,000 to fund ongoing home improvements.
They had an existing residential mortgage with HSBC and wanted to explore how they could release additional funds from their property without refinancing their entire mortgage.
Their property was valued at approximately £550,000, with an existing mortgage balance of around £321,000. The additional borrowing would increase their total mortgage debt to approximately £351,000, representing a loan-to-value (LTV) of around 64%.
Both customers were employed, with regular salaried income. Their main concern was not their ability to borrow the additional funds, but how to do so without incurring unnecessary costs or increasing their monthly commitments beyond their preferred budget.
They wanted a five-year fixed-rate product on a capital repayment basis, with a term long enough to keep the additional monthly repayments manageable.
Keeping initial costs down was also important, particularly as they were already spending money on their property improvements.
The Challenge
The main challenge was arranging additional borrowing without triggering early repayment charges on the customers’ existing fixed-rate mortgage.
Their current mortgage was still within its fixed-rate period, meaning that repaying it early to move to another lender would have resulted in a substantial penalty.
In this case, the early repayment charge would have exceeded £4,000.
Although a full remortgage could have provided the additional £30,000, the cost of leaving their existing arrangement early would have made this considerably less attractive.
We also needed to consider the customers’ preferences for their new borrowing.
They wanted to:
- Retain their existing HSBC mortgage without triggering early repayment charges.
- Borrow an additional £30,000 for home improvements.
- Secure a five-year fixed rate for predictable repayments.
- Arrange the additional borrowing on a capital repayment basis.
- Keep their monthly commitments within a comfortable budget.
- Avoid unnecessary upfront product costs.
The challenge was therefore to find a suitable way of raising the required funds while preserving the benefits of their existing mortgage arrangement.
What We Did
We started by reviewing the customers’ existing mortgage terms, including their current fixed-rate arrangement and the early repayment charges that would apply if they switched lenders.
This established that a full remortgage would involve a significant additional cost.
Rather than automatically recommending a new mortgage with another lender, we investigated whether HSBC could provide the additional borrowing through a further advance.
A further advance allows an existing mortgage customer to borrow additional money from their current lender without replacing the original mortgage.
We reviewed HSBC’s available further advance products and considered how the additional borrowing could be structured to meet the customers’ requirements.
We also contacted the lender and its Business Development Manager in advance to discuss the circumstances and the proposed additional borrowing.
An important part of our assessment was ensuring that the customers could obtain the funding they needed while leaving their existing fixed-rate mortgage unchanged.
We reviewed their employed income, affordability information and existing financial commitments to support the additional borrowing application.
We then identified a five-year fixed-rate further advance with no lender product fee, available over a 33-year repayment term.
This structure addressed the customers’ preferences for predictable payments and helped keep the additional borrowing within their intended monthly budget.
By using HSBC’s further advance option rather than replacing the existing mortgage, we were able to arrange the additional borrowing without triggering the early repayment charges.
The Solution
We arranged a £30,000 further advance with HSBC to provide the additional capital required for the customers’ home improvements.
The further advance was structured as follows:
| Detail | Mortgage arrangement |
| Location | Ascot, Berkshire |
| Lender | HSBC |
| Additional borrowing | £30,000 |
| Total mortgage borrowing | Approximately £351,000 |
| Loan-to-value | Approximately 64% |
| Repayment type | Capital repayment |
| Mortgage term | 33 years |
| Product | Five-year fixed rate |
| Lender product fee | None |
The existing HSBC mortgage remained in place, allowing our customers to retain their existing fixed-rate arrangement without paying an early repayment charge.
The additional £30,000 was arranged separately through the further advance, with its own five-year fixed-rate period.
The 33-year repayment term helped spread the cost of the additional borrowing, supporting the customers’ preference for manageable monthly payments.
Why This Solution Worked
The further advance was suitable because it allowed our customers to raise the additional funds they needed without replacing their existing mortgage.
The most important benefit was avoiding an early repayment charge of more than £4,000 that would otherwise have applied if they had refinanced their existing mortgage with another lender.
The solution also allowed them to retain their existing fixed-rate mortgage while securing a separate fixed-rate arrangement for the additional borrowing.
By selecting a capital repayment mortgage over 33 years, the additional borrowing was structured to support their monthly budget while gradually reducing the outstanding capital balance.
The absence of a lender product fee also helped keep the initial borrowing costs down.
The Result
Our customers successfully secured a £30,000 further advance with HSBC to fund their remaining home improvements.
They were able to retain their existing mortgage without triggering early repayment charges, avoiding a potential cost of more than £4,000 associated with switching lenders.
The five-year fixed-rate product provided certainty over the payments on their additional borrowing, while the repayment term helped keep the monthly commitment within their budget.
A further review of their mortgage protection requirements was also planned.
What This Case Shows
Homeowners who need to borrow more money during an existing fixed-rate mortgage do not necessarily need to remortgage to another lender.
Depending on the lender’s criteria and the customer’s circumstances, a further advance may allow additional borrowing without disturbing the existing mortgage or triggering early repayment charges.
However, a further advance is not automatically the most suitable option. The interest rate on the additional borrowing, repayment term, total borrowing costs and available alternatives all need to be considered.
In this case, reviewing the existing mortgage before recommending a new arrangement made a significant difference.
By identifying a suitable further advance with HSBC, we helped our customers obtain the funding they needed while avoiding substantial early repayment charges.
Looking to Borrow More Against Your Home?
If you’re considering home improvements but are still within your existing mortgage’s fixed-rate period, it is worth reviewing your options before committing to a full remortgage.
At Kerr & Watson, we provide independent, whole-of-market mortgage advice in Ascot and the surrounding areas.
We can review your existing mortgage, assess any early repayment charges and compare the available options for funding home improvements.
Contact Kerr & Watson to discuss your circumstances and explore your options.
