What is '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.