Getting ready to renovate, buy a car or consolidate debt? If you’ve had your home loan for a while, it’s worth checking to see if there’s equity available in your property – that's the difference between your property’s market value and what you owe on your home loan. Instead of taking out a personal loan or credit card, you could apply to top up your home loan so you don't have extra loans and repayments to manage, and keep it all under the one rate.
3.5 minute read
Topping up or increasing your home loan is a way to unlock more funds by borrowing against the equity you've built up on your current property. The amount you can increase your loan by will depend on how much equity you have.
Rather than getting a personal loan or credit card, you could apply to increase your home loan if you have usable equity. This could save you interest in the short term, because the interest rate will almost always be lower for a home loan.
However, you also need to consider the life of the loan, because the longer the loan term, the more interest you’ll pay. Remember that any top up will be subject to our existing lending criteria, and fees and charges.
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. However, keep in mind that traditional lending criteria will still apply for a home loan top up.
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 refinance your home loan and switch to another product, add an offset account or even change your repayment frequency.
Increasing your home loan is simply increasing the limit on your existing home loan. This means your current product, loan features and conditions won’t change. Refinancing involves switching your loan to another product, which could include different features and conditions.
This depends on how much equity you have, plus your personal situation. Our Home Lending Specialists will be able to chat through your options.
This depends on the new loan terms you've discussed with us and agreed to during the application process for your increase.
Depending on needs and objectives, you might want the current length of your loan to stay the same – meaning your minimum monthly repayment would be higher.
Otherwise, you could apply to extend the life of your loan – meaning your repayments would reduce, but you'd pay more interest over time.
We take care of all the BS (bank stuff) so you can access the knowledge you need to make informed decisions. When we write a guide or article, we take steps to make sure the information is relevant, accurate and most of all, helpful.
Talk to a Home Lending Specialist – when and where it suits you.