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Should you increase (top up) your home loan?

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.

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 top ups, the amount you can access 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, which 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.

What's next?

You can apply to increase your home loan through NetBank or book an appointment with a Home Lending Specialist at a time and place that suits you.

Book an appointment with a Home Lending Specialist at a time and place that suits you