Future Advance


DEFINITION of 'Future Advance'

A clause in a mortgage which enables the lender to advance funds after the loan closing. The initial agreement of the loan remains intact in that no additional collateral is required, and no refinancing is necessary. Future advance can refer to a variety of loans such as home equity loans, construction loans and commercial loan advance mortgages where the amount of the loan has not been fully used at the time of loan closing.

BREAKING DOWN 'Future Advance'

A future advance is most commonly used with regards to construction work. Contractors are often paid on a schedule as the work is completed, with a portion held until all work is finalized, and with the building being built used as collateral.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Lien

    The legal right of a creditor to sell the collateral property ...
  3. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  4. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  5. Closing

    The end of a trading session. The closing of a trading day halts ...
  6. Construction Loan Note - CLN

    A short-term obligation in the form of a note, used for the funding ...
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