A handy guide to home loan top ups

We’d all like to have a little more flexibility in our lives – especially when it comes to our finances.

Whether you want to renovate your home, pay off your credit card debt, or jet off on a dream holiday, a home loan top up can be a great and cost-effective way to access extra funds when you need them.

However, it’s important to understand the pros and cons of a home loan top up, as well as what’s involved in the process, so you can decide if it’s the right choice for you.

What is a home loan top up?

A home loan top up is an increase to your existing home loan amount. Think of it as adding an extra slice to your mortgage pie.

A home loan top up lets you borrow additional funds against the equity you’ve built up in your property.

How does a home loan top up work?

When you apply for a home loan top up, your lender will need to look at your current financial situation, including factors like your income, debts, and what your property is currently worth.

The key thing here is that your property's value needs to have increased since you took out your original loan, as this is what allows you to access the top up.

Why might you need a home loan top up?

• Home improvements: Want to redo the kitchen, update the bathroom, or add that backyard pool you’ve always dreamed of? Renovations are one of the most common reasons for seeking a home loan top up, giving you the funds you need to get going on your project.
• Big purchases: Whether it’s a brand new car or a bucket list family holiday to Hawaii, a home loan top up can provide you with the money you need for those large expenses.
• Debt consolidation: If you're juggling multiple debts – like credit cards or personal loans - a top up can help consolidate these into your home loan, potentially at a lower interest rate. This can make it easier to pay off your debts more quickly.

Benefits of a home loan top up

• Access additional cash: These additional funds can be useful for things such as renovating your home, buying an investment property, going on a holiday or consolidating debts like credit cards, personal loans or car loans.
• Lower interest rates: In most cases, home loan interest rates are lower than those for personal loans or credit cards, making top ups a more cost-effective borrowing option.
• Convenience: Adding to your existing mortgage can be easier than applying for a new loan, especially since you're dealing with your current lender.
• Versatility: From home renovations to a dream family vacation, you can use your home loan top up for all kinds of expenses.

3 things to consider before requesting a home loan top up

1. Increased debt: At the end of the day, a top up means you're borrowing more money. This increases your overall debt and potentially your loan term.
2. Higher repayments: More debt means higher repayments, so it's crucial to ensure that you can comfortably manage the extra financial commitment that comes with this.
3. Home equity risk: By using your home's equity for your top up, you're reducing the portion of the property you own outright. This means that if property values fall, you could end up owing more than your home is worth.

Is a home loan top up right for you?

While a home loan top-up can seem like a fast and easy way to access extra funds, it’s important to be aware of what’s involved and how it can impact you both now and in the future.

When considering a home loan top-up, here are three questions you should be clear on:

• What do I need it for? Think about your reasons for wanting a top up and make sure it’s a financially savvy decision.
• Can I afford it? Consider your expenses and make sure you can comfortably afford the increased repayments without stretching yourself too thin.
• How will it affect me in the long term? Take some time to think over how this decision will impact your long-term financial plans.

A home loan top up can be a simple, flexible and cost-effective way to borrow the money you need. By weighing up the pros and cons of this option, you can make an informed choice that fits with your needs and goals.

If you want to have access to additional funds, you might be able to top up your home loan. Learn more about how our top ups feature works at Unloan.

‍

This article is intended to provide general information 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.

Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information 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.