Increasing your home loan

Compared to a personal loan or credit card, the interest rate on your home loan is almost always lower. This means that you save on interest in the short term, but you need to take into account the life of the loan. Like with any loan, the longer the loan term, the more interest you’ll pay.

With a home loan increase, you could either combine your new loan with your existing home loan repayments or keep it separate.

If you’re renovating, upgrading, or purchasing an investment property, it might be better to combine it with your existing loan. Keep in mind that your repayments will increase, so it’s important to make sure you’re comfortable with the new repayments (just so it doesn’t take you by surprise).

If you’re getting the home loan to purchase a vehicle or consolidate debt, you might want to keep the loans separate and split your repayments. It means you can track repayments and set a shorter loan term – allowing you to pay it off sooner.

Get a sense for which option might work better for you and calculate your repayments.

By increasing your home loan, you can avoid the fees that usually come with a personal loan or credit card. As it’s attached to your existing home loan, there aren’t any additional ongoing fees – even if you’re on the Complete Fixed or Complete Variable Home Loan Package.

A one-off application fee may apply, but this depends on your current home loan product and how you would like to set up your repayments.

Typically, one standard property valuation is provided for free. It’s rare, but if your property is a bit more complex, there may be a fee to cover the excess valuation costs.

If you’re borrowing more than 80% of your home loan, then LMI will apply - even if you’ve paid LMI in the past. It might seem like an extra cost, but it may be more cost effective than taking out a personal loan or credit card and you might be able to add it to the loan.

While you’re increasing your home loan, it’s also a good time to check you’re getting the most out of your product, interest rate, repayments and account features. You might want to switch to another product, add an offset account or even change your repayment frequency.

• How to finance your renovation
• Using equity to buy an investment property
• Take the next step to buying your second property
• How to check you've still got the right home loan