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Increasing or topping up your home loan can be an excellent way to access additional funds for those big purchases, particularly when compared to credit card options. It enables you to lend extra cash against the equity you have built on your property, which you can use to pay for a holiday, upgrade your car and more.
Increasing your mortgage can be a more affordable alternative to taking out different kinds of loans or using a credit card, given that interest rates on home loans are substantially lower. It also has the edge over credit cards (and other unsecured borrowings) as it enables you to lend more.
Moreover, a top-up can take the hassle out of managing your debts. Instead of handling many credit accounts, you can even consolidate them into one and pay a single interest rate on them.
The downside of topping up your mortgage is it increases your debt. Regardless, the amount granted by your bank, you can expect your weekly or monthly repayments to increase.
You will also pay off the increased debt instantly. Else you will invalidate the benefits of a top-up. Let’s assume you have 12 years left on your home loan, and you ask your bank to increase your borrowed sum so you can buy a new car. While the rate might be much lower than an average auto loan, the cumulative interest rate could be higher if you extend your repayments over the entire 12 year period.
When evaluating your application for a top-up loan, your lending institution will analyse your current loan-to-value ratio (LVR). Typically, the LVR is 80 per cent of the property’s value.
When it is likely to borrow more, this needs purchasing Lender’s Mortgage Insurance (LMI). It protects your lending institution against the loss if you fail to repay the loan and can be pretty expensive.
You should keep in mind that the top-up request is subject to your bank’s approval. Hence, you must show you are on a firm financial footing and not skip your monthly repayments. Your lender will also decline your application if the reason for increasing your home loan sum is to cover tax bills or business expenses.
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”