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Article | 3 minute read

Looking to build that home office? A home-loan top up could help.

If you’re looking to access cash for bigger goals such as building a home office or buying a new car, you might want to first look in your own backyard – that is, at your existing home loan.

There are plenty of different avenues to consider when you’re looking for extra cash, but many people don’t realise that topping up your home loan is one of them.

A home loan top-up, or increase, is something you might be able to use when you have some bigger goals to achieve. 

If you have a home loan or equity in your home, and the ability to make repayments, you might be able to borrow additional cash against your home. Depending on your circumstances, this may work out to be cheaper than other loans or credit cards, but you should consider your options. 

How it works

Whether or not you’re able to access a home loan top-up may depend on a few things. 

Firstly, you’ll need to check to see if topping up will work with your home loan or is worth doing. All ANZ home loans can be topped up, however, fixed rate loans will incur an early repayment cost if varied, which can be significant.  

From there, the amount that you’re able to borrow will depend on a range of factors including:

  • how much equity you’ve accumulated in your property
  • the current value of your home
  • what additional repayments you can afford and your current financial circumstances
  • what you want to use the money for

You can speak to your lender about these things – they’ll be able to tell you how much additional money you might be able to access and what fees or additional interest may apply to the changes. 

Crunch the numbers 

So, if you’ve decided that the living room table is no longer cutting it as your pseudo office and that a home loan top-up is the way to go, here are some things you should consider as you weigh up your options.  

Depending on your circumstances, topping up your home loan might cost less than another type of loan. Home loan interest rates are usually lower than rates for credit cards, car loans or personal loans.

However, it’s important to explore your other options and do your research. It also helps to be aware that if you do top up your home loan, you will likely have to pay a renegotiation fee, and additional interest over your loan’s lifetime, which may also end up being longer. 

Consider what you’ll use it for and if it’s the right fit

You should also consider what you want to use the money for. More specifically, will you be happy continuing to pay for it over time?

For example, if you purchase a car with your increased home loan, you might be comfortable paying for it over time, compared to, say, using it for a holiday. That’s because a well-deserved trip around Australia might be exciting, but if you’re paying for it long after you’ve been, over time, it might not feel like a good use of money. 

Next steps

If you’re ready to explore a home loan top-up further, you can reach out to your lender and have a chat. They can help you understand how much you might be able to increase your loan by and what interest rates, fees and charges apply. That way, you can assess your options and choose what’s right for you.

If you’re uncertain about whether topping up your home loan is appropriate for you or your personal circumstances, you should seek the advice of an appropriately qualified financial, taxation or other professional adviser.

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