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Understanding the purpose of a top-up home loan

For those who aren’t too familiar with the term, a top-up home loan allows homeowners to access the equity accrued on their home without having to sell the property first. Once you have access to that money, you can then use it to fund a number of things such as home improvements, essential repairs or purchasing a car.

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What is equity?

Equity is the difference between the market value of your property, and how much you still have left to pay on your home loan.

For example, if your home is worth $800,000, and you still have $500,000 left to pay on your home loan, then your equity will be $300,000.

If the value of your home increases to $1,000,000 over the next 10 years, and you’ve continued making payments on your loan so that you now only owe $300,000, then the equity you hold on your home will increase to $700,000.

Through a home loan top-up, the amount of money you can borrow by guaranteeing against your home, depends completely on how soon you’ll be able to pay off your loan (in other words, your financial stability), and the value of your home. Your lender will likely have your property valued by a professional, so be prepared if their evaluation doesn’t match up to what you expected the value of your home to be.

If you’re looking to top up your home loan, you should also be prepared to pay the following fees:

  • A valuation fee
  • Legal fees
  • Home loan protection insurance
  • Other fees as applicable

Since you’ll pay more interest over the life of your loan as a result of topping up, you should consider asking one of our Home Loan Specialists for advice before you decide to borrow against your home, that way you’re aware of all your options and risks.

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How do top-up home loans work?


The purpose of a top-up home loan is quite simple. Once you meet the criteria set out by your lender, you borrow money against the equity in your home.

Top-up home loans can be very useful. Since interest rates on home loans tend to be lower than those of car loans or personal loans, borrowing money through a top-up home loan from a bank or lender in Australia, can mean you’ll likely pay less in interest.

As borrowing through a top-up home loan offers flexibility in refinancing, the funds can be used on a wide variety of expenditures such as:

  • Home improvements and renovations
  • Purchasing other investment properties
  • Paying off outstanding debts i.e. consolidating debt
  • Using the equity to fund a deposit for another property purchase

It’s worth consulting with a Home Loan Specialist before you decide to top-up your home loan, as the process is not entirely risk free. Keep in mind that your loan repayments will increase following a top up and your interest will be calculated daily on a larger principal amount.

Want to know more about top-up home loans? Contact our team of Home Loan Specialists today and find out if it’s right for you.

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Tags: house, property, top up, refinance

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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