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Increasing your mortgage – key considerations.
When does it make sense to increase a mortgage?
Increasing your mortgage makes sense if you’re planning a major renovation or conversion to increase the value of your property. It can also be an way of keeping your owner-occupied home without having to sell it. However, it is important to ensure that the increase is financially sustainable, within the 80% loan-to-value limit, and that the mortgage provider estimates the value of the property accordingly.
Topping up your mortgage for conversions and renovations.
Increasing a mortgage for conversions and renovations can be a good way to increase the value of the property and finance any necessary work. Lenders will check the affordability, the loan-to-value ratio and the value of the property. A well-planned conversion can increase the value of the property and maintain it in the long term. However, it is important to check financing options at an early stage, as mortgage providers often take a conservative approach to valuations. Many lenders offer special mortgage products with advantageous terms specifically for energy-efficient renovations of properties. It is worth checking and comparing these offers.
Topping up your mortgage for private purposes.
Topping up a mortgage for private purposes, such as for unforeseen expenses or financial security in old age, can be a way of accessing capital without having to sell your property. Banks will check the affordability, the loan-to-value ratio and the value of the property. Mortgage increases for private use are often only possible as part of a first mortgage. You should make sure that the additional debt is sustainable over the long term, especially if the interest burden increases or your income situation changes. Early planning and advice are crucial here.
Increasing your mortgage for a second property.
It is generally possible to increase a mortgage for the purchase or renovation of a second home. Lenders will check the affordability of the additional debt and the value of the property. However, mortgage providers generally impose stricter requirements on the loan-to-value ratio and equity ratio for second homes, as these are considered riskier. Early advice and detailed financial planning are therefore advisable to ensure that the additional costs are affordable and that the bank grants the loan.
What others wanted to know.
Our mortgage experts give an insight into a selection of the most frequently asked questions. Submit your own question. We will be happy to help you.
Sandra L. (63), Kloten
I’m retiring in a few years. Can I still increase my mortgage?
Even if you retire in a few years’ time, it may be possible to increase your mortgage. However, mortgage lenders check whether the additional burden will still be affordable after retirement if your income is lower. More stringent requirements apply to pensioners in particular, such as a maximum loan-to-value ratio of 65% of the property value. Early planning is important.
Sali A. (37), Kreuzlingen
Can I top up my mortgage to buy a car?
This would be a misuse of mortgage assets intended for home ownership. A car is a consumer good that usually losses value quickly and therefore can hardly be borrowed against. For this reason, leasing or consumer loans are used to buy a car, which have to be repaid in a much shorter time than a mortgage, which is secured for a long time by the equivalent value of the property.
Sandra L. (63), Kloten
I’m retiring in a few years. Can I still increase my mortgage?
Even if you retire in a few years’ time, it may be possible to increase your mortgage. However, mortgage lenders check whether the additional burden will still be affordable after retirement if your income is lower. More stringent requirements apply to pensioners in particular, such as a maximum loan-to-value ratio of 65% of the property value. Early planning is important.
Sali A. (37), Kreuzlingen
Can I top up my mortgage to buy a car?
This would be a misuse of mortgage assets intended for home ownership. A car is a consumer good that usually losses value quickly and therefore can hardly be borrowed against. For this reason, leasing or consumer loans are used to buy a car, which have to be repaid in a much shorter time than a mortgage, which is secured for a long time by the equivalent value of the property.
