A simple guide to increasing (topping up) your home loan

If you’re planning big bathroom renovations and already have a mortgage, why not consider a top up? Instead of starting from square one with a new loan application, a home loan top up, or home loan increase, allows you to borrow money on top of your existing mortgage.

Although you’re using your home loan, these top ups don’t have to be home-related. You can use your increase on a family holiday, a car you’ve had your eye on, or you may just want to consolidate existing debt. Here’s how it works.

Home loan increase (top up) basics

With a home loan top up, your lender can add additional funds to your existing home loan. This is why some lenders also refer to top ups as “add loans”.  

Top ups increase the total amount of your original home loan, but the home loan product itself never changes. This means that your loan term remains consistent and only your repayment amounts increase. However, if you increase your borrowing to over 80% of the value of your house, Lenders Mortgage Insurance (LMI) may apply.

For example: if you have a $450,000 home loan with 20 years remaining and are set on buying a new car, you may apply for a $15,000 add loan. If successful, your home loan would increase to $465,000, and you’d still have 20 years to repay that amount.

Home loan top up benefits

So, why choose a top up over more familiar lending options?

• Leaning on your home loan can be cheaper. This is because interest rates on mortgages are often lower than rates on personal loans or credit cards.
• Top ups can be more convenient. Having your banking in one place with a single interest rate can simplify managing and planning for repayments. Depending on your goals, you may also be able to borrow more than a typical credit card or personal loan would allow.

Factor in your budget

A top up may have its perks, but you should still carefully consider your long-term budget before increasing your home loan amount. Increasing the sum of your home loan means your repayments will similarly rise until your loan is paid off. Interest paid over the life of the loan can also increase.

Depending on the length of your remaining mortgage, opting for the minimum repayment amount could also make your add loan cost more than a personal loan. With this in mind it’s best to carefully consider your options before making any decisions.

Lenders may also specify a minimum borrowing amount for a top up loan. In the case of Suncorp Bank’s Add Loan, the amount is $10,000. If you’re after a little less, it could be worth looking into a credit card or personal loan instead.

Home loan top up fees

As with other loans, a home loan increase can involve fees. An add loan can carry a renegotiation fee, which should also be factored into your budget. This fee can be waived under some circumstances, such as when you apply for an Add Loan with Suncorp’s Home Package Plus.

Top ups can only be applied on variable home loans, so if you have a fixed rate home loan, it may not be a good option.

Looking to increase your home loan?

Depending on the amount and your goals, increasing your home loan with a top up, or add loan, can offer more value compared to some other financial options.

If you have questions about your borrowing options, we’re happy to assist. Our home lending experts can help you understand your options and all consultations are 100% obligation-free.

Talk to a home lending specialist

Read more:

• How much does the average home renovation cost in Australia?
• Financing a renovation: what are your options
• Should you apply for a renovation loan?

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs.

Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Fees, charges, terms and conditions apply and are available on request. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product.