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.

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 January 17th, 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
3.59%
3.59%
$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.
3.59%
3.61%
$0
$0 p.a.
90%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2000000 from a convenient online lender.
3.69%
3.72%
$445
$0 p.a.
90%
NSW and ACT customers only. Get a special discount for a limited time when you open an IMB Transaction Account.
3.49%
4.57%
$0
$395 p.a.
90%
Loans over $150000 get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.49%
3.64%
$0
$10 monthly ($120 p.a.)
70%
A very low variable interest rate for home buyers with a 30% deposit. This product has a 100% offset account.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.57%
3.58%
$0
$0 p.a.
80%
Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.
3.89%
3.91%
$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.
3.54%
3.58%
$0
$0 p.a.
80%
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility. $900 cashback offer.
3.59%
3.62%
$0
$0 p.a.
80%
A low, variable rate mortgage for home buyers wishing to consolidate existing debts. Refinancers can get up to $1,000 on settlement to help with switching costs.
3.75%
3.75%
$0
$0 p.a.
70%
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
3.49%
3.53%
$250
$0 p.a.
80%
A very low variable interest rate for borrowers with a 20% deposit. Add a 100% offset account for $10 a month.
3.49%
3.52%
$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.
3.69%
3.85%
$0
$10 monthly ($120 p.a.)
70%
A low fixed rate mortgage for borrowers with a 30% deposit. Comes with a 100% offset account.
3.75%
4.49%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account. $1,500 cashback available (conditions apply).
3.80%
4.05%
$0
$0 p.a.
70%
Earn tens of thousands of Qantas Points to spend on flights, hotels and more with this variable owner occupier mortgage. Competitive variable rate mortgage that requires a 30% deposit.
3.73%
3.87%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (for a limited time, subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.74%
4.49%
$445
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online.
3.85%
3.85%
$0
$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.70%
3.90%
$0
$0 p.a.
70%
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.67%
3.72%
$600
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.59%
3.63%
$0
$0 p.a.
90%
Get a low variable interest rate and buy a property with just a 10% deposit. 100% offset account attached.
3.89%
4.27%
$0
$395 p.a.
80%
New borrowers or refinancers can get a discounted rate with this package loan.
3.54%
3.69%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate for home buyers with a 20% deposit. This product has a 100% offset account.
3.82%
3.93%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.68%
3.70%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers that comes with a no fee debit card with a $5,000 limit.
3.64%
3.59%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.79%
4.22%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.74%
4.13%
$0
$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.70%
3.70%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at $70% or below with this innovative online lender.
3.69%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.75%
4.00%
$0
$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate. Cut down on interest costs with a 100% offset account.
3.98%
5.01%
$0
$395 p.a.
90%
Fix the rate on your investment property for 2 years with this competitive home loan package.
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
3.79%
4.87%
$0
$395 p.a.
95%
Low deposit home loan. Enjoy flexible repayment options while paying limited fees.
3.59%
4.14%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.69%
4.08%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.77%
3.82%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.99%
3.95%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.74%
4.55%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150000 receive a discounted rate. NSW, QLD and ACT residents only.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
4.19%
4.64%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.94%
4.95%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no application or ongoing fees.
4.04%
3.93%
$0
$0 p.a.
80%
Fix your rate for 1 year and make interest-only payments.
3.87%
3.91%
$600
$0 p.a.
95%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 95% LVR.
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.89%
3.94%
$0
$0 p.a.
80%
Pay no application or ongoing fee and borrow up to 80% LVR.
3.74%
4.01%
$395
$0 p.a.
80%
A competitive 3 year fixed rate with no ongoing bank fees.

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