With moving costs — stamp duty, agents’ fees, solicitors — higher than ever, more homeowners are choosing to extend rather than move. But unless you’re paying cash, you’ll need to raise the money somehow, and there isn’t one obvious answer. The right route depends on your current mortgage deal, how much equity you have, and how much you need to borrow. Here are the three main options, and how to think about which one fits.
Option 1: A further advance from your existing lender
A further advance is simply additional borrowing on top of your existing mortgage, with the same lender. Because you’re not remortgaging, there’s no need to change lender, no full legal process, and often no need for a new valuation — which makes it one of the quickest and cheapest ways to release funds.
The catch is that not every lender offers competitive further advance rates, and some will only lend a modest amount above your current balance. It’s worth checking what your lender is offering before assuming it’s the cheapest route — sometimes a further advance rate is noticeably higher than what you’d get by remortgaging elsewhere.
Option 2: Remortgaging to release equity
If your current fixed or tracker deal has ended, or is close to ending, remortgaging to a new lender — and borrowing more in the process — is usually the most cost-effective option. You benefit from whole-of-market rates rather than being tied to your existing lender’s further advance pricing, and any additional borrowing is simply rolled into a single monthly payment.
The main thing to check is your current deal’s early repayment charge (ERC). If you’re mid-way through a fixed rate, remortgaging now could mean paying an ERC of 1–5% of your outstanding balance — and that cost needs weighing against the savings from a better rate.
Option 3: A second charge mortgage
A second charge mortgage is a separate loan secured against your property, sitting alongside your existing mortgage rather than replacing it. It’s particularly worth considering if you’re locked into an attractive fixed rate and the ERC to remortgage would outweigh any benefit — you keep your first mortgage untouched and borrow the extension funds separately.
Second charge rates are typically higher than a mainstream remortgage rate, so it tends to suit shorter-term borrowing or situations where the numbers on remortgaging simply don’t stack up. We cover this in more detail in our second charge mortgage vs remortgage guide.
| Option | Best if… | Watch out for |
|---|---|---|
| Further advance | You want the fastest, simplest route and your lender's rate is competitive | Rates can be uncompetitive versus the wider market; not all lenders offer them |
| Remortgage | Your current deal has ended, or is ending soon, and you want whole-of-market rates | Early repayment charges if you're still mid-deal |
| Second charge mortgage | You're locked into a good rate and an ERC would outweigh remortgaging | Typically higher interest rates than a first-charge remortgage |
How much can you borrow?
This comes down to affordability — your income, outgoings and existing borrowing — rather than the value the extension will add once complete. Some lenders will take a surveyor's estimate of the post-works value into account for larger loans, but this varies significantly by lender, which is where whole-of-market advice makes a real difference.
Tell us what you're planning and what you currently pay, and we'll work out which route makes sense for your numbers. Call 01277 564 054 or send a message.
Talk to an AdviserFAQs
A further advance is often cheapest and quickest if your lender's rate is competitive, since there are no legal or valuation costs. A remortgage can work out cheaper overall if your current deal has ended and a better rate is available elsewhere.
Yes — remortgaging to release equity for home improvements is one of the most common ways to fund an extension, particularly once your current fixed rate has ended.
It can be, especially if you're part-way through an attractive fixed rate and would face a large early repayment charge to remortgage. It sits alongside your existing mortgage rather than replacing it, though rates are typically higher.
Lenders usually base affordability on your current income and outgoings rather than the extension's future value, though some will consider a surveyor's post-works estimate for larger loans.