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Should you increase (top up) your home loan?

Topping up your home loan can be a smart way to get some extra money when you need it.

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Topping up your home loan lets you borrow more against your property, if your loan type allows it and you have enough equity and borrowing capacity.
While a top-up can be a lower-interest way to access funds, topping up your home loan also means you’re taking on more debt and may increase your loan repayments, so it’s important to consider how it fits with your longer-term goals.

Increasing – or topping up – your existing home loan can be an effective way to get access to extra funds. You may want to use the money to renovate or redecorate your home and increase its value, or you could be looking to consolidate all your debts into one.

How does it work?

The first thing to note is that top-ups are not available for all home loans. CommBank customers with a fixed or guaranteed interest rate home loan, for example, are not able to increase their loan amount without breaking the contract, which will trigger an Early Adjustment Repayment.

If your home loan does allow topping up, the amount by which you can increase it will depend on how much equity is available in the property as well as your current financial situation.

Speak to your lender to find out how much you might be able to increase your home loan and whether any charges or fees are associated with making this change. For eligible CommBank home loan customers, there is an establishment fee of $300 for the top-up and a small monthly loan service fee may continue to apply – although both these fees can be waived with our Wealth Package.

What do you need to consider?

Topping up your mortgage will typically cost less than taking out another type of loan because home loans generally offer lower interest rates than credit cards and personal loans. However, topping up your home loan also means you’re taking on more debt and may increase your loan repayments. Before increasing your loan, make sure you’re comfortable with any potential changes to your repayments.

It’s also important to understand that by using your loan increase to make a purchase (e.g. a holiday or vehicle), the life of that purchase could be significantly shorter than your remaining home loan term. Be confident this is compatible with your financial goals.

Our Home Lending Specialists can help with every stage of your property buying journey

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Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs. You should, before acting on this, consider the appropriateness to your circumstances.