How do home loan top-ups work?

If you've built up equity in your home, you may be able to draw out cash using a home loan top-up.

Last updated:

Topping up or increasing your home loan can help you draw out funds for large purchases at a lower interest rate than some other finance options. It can leverage the equity in your home and provide you with a single, easy-to-manage repayment rather than multiple credit accounts.

What is a home loan top-up?

A home loan top-up is an increase to your existing home loan. It allows you to borrow more by using the equity in your home, or the difference between your remaining home loan and the current value of your property.

Here's how it works:

Let's say you purchased your property for $700,000 with a 20% deposit, meaning your original home loan was $560,000. After a few years, you've paid this amount down to $480,000. Meanwhile, your property has increased in value and is now worth $800,000. You would have built up $240,000 in equity.

A home loan top-up will increase the amount of your home loan to draw on this equity. In general, lenders will only increase your home loan up to 80% of the value of your home. In the example above, that means your home loan would increase from $480,000 to $640,000, giving you $160,000 to draw out in cash.

The money you access through a home loan top-up can be used for any purpose. You could use it as a deposit for an investment property, to buy a car, to pay off debt or to do non-structural renovations (structural renovations usually require a construction loan). You'll only be charged interest on the amount you use.

Keep in mind that increasing your home loan can increase your repayments and the amount of time it takes to pay off your mortgage. This means you'll be paying more interest in the long term.

How do I get a home loan top-up?

  1. You need to determine if your home loan is eligible for a top-up. Many fixed rate home loans don't allow increases. Speak to your lender to determine if you're eligible.
  2. Then your lender will assess your serviceability, or your ability to meet the larger repayments. They'll also perform a valuation on your home to determine its current value. This will determine your current loan-to-value ratio (LVR).
  3. You'll likely have to go through an application process to increase your home loan, even though the loan account will remain the same. Some lenders charge an establishment fee for home loan top-ups, so be sure to ask your lender about any fees involved.
  4. If you apply and are approved, you'll be given access to the additional funds through a redraw facility which allows you to withdraw the extra cash as you need it. You may even have the option of using a split facility to place the extra funds in a separate loan account so you can better keep track of the new debt.

What are the benefits?

Using a home loan top-up can be a more efficient way to finance purchases than applying for a personal loan, car loan or credit card. Home loans have lower interest rates than most other finance options. Moreover, a home loan top-up will keep all your debt in one account with one repayment, which can make it much easier to manage. Finally, as mentioned above, you'll only be charged interest on the funds you choose to use.

What are the risks?

Increasing your home loan amount means you'll also be increasing your monthly repayments. You'll need to reassess your budget to make sure you can manage the new repayment amount.

Increasing your mortgage can also lengthen your loan term. By taking longer to repay your home loan, you'll be increasing the amount of interest you pay.

And, while the majority of home loans carry lower interest rates than car loans or personal loans, carrying the debt over a longer term means you'll end up paying more in interest. It's wise to try to pay down the extra debt as quickly as possible.

What are the alternatives to a home loan top-up?

The alternatives to a home loan top-up will depend on what you're using the funds for. You could:

  • Apply for a personal loan or car loan instead. While these carry higher interest rates, they also come with shorter loan terms, meaning you'll pay less in interest overall.
  • Consider a line of credit or home equity loan. This functions much like a home loan increase, giving you access to funds based on the equity in your home. A line of credit differs in that it's a separate loan account, requiring a separate repayment.
  • Depending on the size of your purchase you could also apply for a credit card. However, credit cards generally carry very high interest rates relative to home loans, and, depending on your credit limit, may offer a lower amount of funds for your purchase. If you choose to use a credit card for a major purchase, you'll need to ensure you're disciplined to pay it off as quickly as possible.

If a home loan top-up isn't right for you, consider switching to a new lender to get a better deal

Rates last updated August 20th, 2019
$
% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Maximum Insured LVR Amount Saved Short Description
3.09%
3.09%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.09%
3.05%
$0
$0 p.a.
80%
Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.
3.19%
4.14%
$300
$10 monthly ($120 p.a.)
80%
A low fixed rate loan that lets you borrow up to 80% of your property's value.
3.27%
3.91%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.
3.49%
3.45%
$0
$0 p.a.
80%
A competitive variable mortgage for investors looking to refinance. Principal and interest repayments. Refinancers only.
3.09%
3.12%
$600
$10 monthly ($120 p.a.)
80%
A competitive variable rate for home buyers with a 20% deposit. This product has a 100% offset account.
2.99%
3.63%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
3.33%
4.37%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.59%
3.24%
$0
$0 p.a.
80%
Variable interest only mortgage for owner occupied refinancers. Refinancers only.
3.69%
4.78%
$300
$10 monthly ($120 p.a.)
80%
Special offer for new lending between $150k-$500k & under 80% LVR.
3.69%
3.88%
$0
$10 monthly ($120 p.a.)
80%
This is a competitive, flexible variable rate suitable for borrowers with a good credit history. Borrow up to 80%.
3.47%
3.47%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
2.99%
3.45%
$395
$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.39%
3.83%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
4.79%
5.23%
$995
$15 monthly ($180 p.a.)
80%
Unlimited defaults, judgements and writs registered greater than 24 months before applying.
3.57%
3.59%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.14%
3.65%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.42%
4.50%
$0
$0 p.a.
80%
Get a low fixed rate and pay no application or ongoing fees.
3.14%
3.49%
$395
$0 p.a.
80%
A competitive 3 year fixed rate with no ongoing bank fees.
3.15%
3.19%
$500
$0 p.a.
95%
This mortgage combines a very sharp interest rate with a 100% offset account and it's available with a 5% deposit.
3.59%
3.79%
$599
$10 monthly ($120 p.a.)
55%
A competitive rate offered to self-employed borrowers.
3.45%
3.46%
$500 (if over 80% LVR)
$0 p.a.
80%
A competitive variable mortgage for home buyers. This loan has flexible repayments and an optional redraw facility.
3.29%
4.10%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie mortgage broker today

By submitting this form, you agree to the Finder Privacy and Cookies Policy and Terms of Use

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. © 2019 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the finder.com.au Privacy and Cookies Policy, Terms of Use, Disclaimer & Privacy Policy and the Aussie privacy policy.

Aussie is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
Logo for UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.09% p.a. and a 3.09% p.a. comparison rate.

Logo for Athena Variable Home Loan - Refinance (Owner Occupier, P&I)
Athena Variable Home Loan - Refinance (Owner Occupier, P&I)

Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site