Can I Get a Top-Up on My Mortgage?
Using the equity in your property to borrow more money—commonly known as a mortgage top-up—is a popular way to fund renovations, consolidate high-interest debt, or make large purchases. But just because you can apply for a top-up doesn’t mean you should.
Let’s take a closer look at what a mortgage top-up is, when it’s a good idea, and how to increase your chances of approval.
What Is a Mortgage Top-Up?
A mortgage top-up is an additional loan added to your existing home loan. In practical terms, the bank increases the amount you owe on your mortgage and releases the difference to you in cash. It’s essentially a way of borrowing more against the current value of your property.
But while it may be an easy way to access funds, the increased loan amount means you’ll be paying more interest over time—often significantly more if you extend the repayment period. That’s why it’s important to weigh the long-term cost carefully before making a decision.
When Is a Mortgage Top-Up a Smart Move?
Top-ups make the most sense when the money is being used to improve the value of your home or your quality of life in a meaningful way. For example:
Renovating your kitchen or bathroom
Installing insulation, heat pumps, or double glazing
Building a deck or creating outdoor living space
These are projects that can increase your home’s market value or improve comfort while you live there.
Top-ups can also make sense for debt consolidation. If you’re paying 20% interest on a credit card and can consolidate that debt into your mortgage at 7%, you’ll save money—provided you don’t extend that repayment over 30 years.
Just make sure the numbers stack up. There are often break fees and costs to consider when refinancing. A mortgage broker can help you run the numbers and assess the long-term impact.
What the Bank Looks at When You Apply for a Top-Up
Just like a standard home loan application, banks assess your ability to repay the increased mortgage amount. They’ll look at:
Your income (and whether it’s stable and ongoing)
Your spending habits
Your current debts (including car loans, student loans, and credit cards)
Your credit score
Affordability under higher interest rates
Since the introduction of tighter lending rules under the CCCFA, banks now require proof that your day-to-day budget can comfortably absorb higher repayments. This includes providing three months of bank statements that reflect your typical spending.
If your financial profile doesn’t align with the bank’s requirements, your top-up may be declined—even if your income and property value suggest otherwise.
Loan-to-Value Ratio (LVR) Rules Still Apply
The other major factor in your top-up application is equity.
Most banks won’t let your total lending go above 80% of your property’s value. So if your home is worth $800,000, your total mortgage after the top-up can’t exceed $640,000—unless you qualify for an exemption (such as a first home buyer in some cases).
If your property has increased in value or you’ve been paying down your mortgage for several years, this might work in your favour. If not, you might hit a ceiling on how much you can borrow.
Does the Bank Care What I’m Using the Money For?
Yes—and your intended use will influence the loan’s structure.
Improving the house? The top-up is usually added to the overall mortgage term (e.g. 30 years).
Buying a car or furniture? The bank might structure the top-up as a short-term loan—often 5 years.
Going on holiday or planning a wedding? You might still be approved, but the bank will insist the loan be repaid faster to minimise long-term interest costs.
Think twice before borrowing for short-term lifestyle expenses. That overseas trip might cost $10,000—but if repaid over 30 years, you could end up paying $20,000 once interest is factored in.
If you’re applying for a top-up to fund a new business, the bank may see this as a sign your income is about to become unpredictable—which could make them nervous. But if it’s a small side hustle that doesn’t affect your main income stream, it may still be acceptable.
Transparency Matters
Always be upfront with your mortgage adviser and lender. Banks are legally required to ensure that lending is suitable and affordable for you, so giving them the full picture is the best way to ensure your application doesn’t hit any snags.
If the purpose of the loan changes after you’ve applied (e.g. from house renovations to personal travel), your bank needs to know.
How to Improve Your Chances of Approval
If a top-up is in your future, here are a few tips to get ready:
1. Use a Mortgage Adviser
They’ll make sure your application is complete and help you understand what the bank will need to see. They can also guide you to the lender most likely to say yes.
2. Get a bank-approved Property Valuation
If you haven’t had a valuation done recently, your home may be worth more than you think. Increased value = more equity = better LVR position. This could unlock more borrowing room. Make sure the valuation is ordered through a bank approved system first though.
3. Get Your Budget in Shape
The bank will be scrutinising your spending. Three months of lean, sensible budgeting before you apply can make a big difference.
4. Pay Down Short-Term Debts
Clearing high-interest or low-balance debts (like credit cards or personal loans) can improve your affordability calculations.
5. Reduce Unused Credit Limits
Even if you don’t use your credit card, the bank assumes you might. Lowering your credit limit can improve your debt-to-income ratio and make your application stronger.
A Word of Caution
Top-ups can be a useful financial tool—but only if you use them wisely. Borrowing against your home for non-essential spending can create long-term financial strain. Every dollar you take out needs to be repaid—with interest—over the life of your mortgage.
So before you hit “apply,” ask yourself:
Will this expense improve my property or quality of life?
Can I repay this debt comfortably, even if interest rates rise?
Have I considered the full cost of interest over the loan’s life?
If the answers are yes—and your finances are in good shape—a top-up could be a smart way to use the equity in your home.
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