Top up
Topping up your mortgage
Borrowing more against your existing home is a common way to fund renovations, a vehicle, debt consolidation or a deposit on another property. Tell us what you need and a mortgage broker or lender can get in touch to talk it through.
Who this suits
A top up means borrowing more against a home you already own. People do it for lots of reasons, and the purpose shapes how the loan is set up.
- You are planning a renovation and want to see how the extra borrowing could sit alongside your current mortgage.
- You need a vehicle and are weighing a top up against other kinds of finance.
- You have credit cards, a car loan or a personal loan and are thinking about rolling them into the mortgage.
- You want a deposit for a second property, such as an investment or a holiday home.
- A big expense is coming up, such as school fees, a wedding or helping family, and you would like to see the options.
- Your home has gone up in value and you are wondering how much of that equity you could use.
What a mortgage broker does here
Top up lending is a little different to a first home loan, because you already have a mortgage and a property to work with. A mortgage broker can generally help with each of these.
Checking your equity
Equity is what your home is worth minus what you owe. Lenders look at how much of the value is already lent against it, and they usually keep a margin. A mortgage broker can work out a rough view of your equity and what a lender may want to confirm with a valuation. Equity changes with the market, so a figure from last year may not be the figure a lender uses today.
What the money is for
Lenders ask what a top up is for, and the answer affects how the loan is assessed. Renovations, debt consolidation and a deposit on another property are all looked at a little differently. Lenders have legal obligations around responsible lending, so expect questions about your spending and your ability to repay. If the money is for a renovation, expect the lender to ask for quotes or a plan, and sometimes to pay out in stages as the work is done.
Looking at your income and debts
A bigger loan means a lender checks again that your income covers it. A mortgage broker can go through your current commitments with you so you can see how they add up, before a lender looks at them.
Structuring the top up
A top up can be added to an existing split or set up as its own split with its own term and rate. The loan term matters. Borrowing for something short lived, like a car, over a long mortgage term means paying interest on it long after it has gone. A mortgage broker can explain the options.
Current lender or a different one
Some people top up with their current lender, and others refinance the whole loan to a new lender at the same time. Each route has different paperwork, and breaking a fixed term to move can bring a break fee. A mortgage broker can compare the routes so the choice is clearer. Your current lender will also have a view on how it treats existing customers, so asking what it can offer is a reasonable first step.
Valuation, approval and drawdown
The lender will usually want to see a valuation or estimate, approve the new borrowing and then release the money, either as a lump sum or, for renovations, sometimes in stages. A mortgage broker keeps track of what is needed and by when. Funds are usually paid into your account or direct to the supplier, depending on the purpose and the lender.
Keeping the repayments in view
A mortgage broker can set out how the extra borrowing affects your repayments across the term, and what changes if you choose a shorter or longer term for the top up. Seeing the weekly or fortnightly figure beside your usual spending can make it clearer whether the plan fits, and it gives you something concrete to take into the conversation with the lender.
Waikato and Bay of Plenty
If you are topping up on a home in Hamilton or Tauranga and Pāpāmoa, a mortgage broker can talk through how the work or purchase you have in mind fits with your equity. Renovations, extensions, sleepouts and a deposit on another property are each handled a little differently.
If you are looking at a lifestyle block or a smaller Waikato town such as Matamata, and the money is for something like fencing, a shed, a bore or a work vehicle, say so when you get in touch. A lender may look at the property and the purpose differently from a suburban house.
A top up for a renovation is also worth thinking about alongside the value the work might add. A lender will form its own view on that, which may differ from yours, so it can help to have your quotes ready. If the money is for an investment, such as a deposit on a rental, the lender will also want to know how the new property will be held and how its rent is expected to be treated.
If regular repayments are the hard part, and you are later in life, a reverse mortgage is a different way to use the equity. Read how a reverse mortgage works if repayments are the hard part.
What to have ready
A top up is a fresh lending decision, so a lender will want an up to date picture of your finances as well as the details of your current loan.
- Your current mortgage balance and loan splits, from your latest statement
- A rough idea of what your home is worth, such as a recent appraisal or nearby sales
- Photo ID for each person on the loan
- Payslips from the last few months, or your accounts and tax returns if you are self-employed
- Bank statements for the accounts you use day to day
- Balances and limits for any cards, car finance or personal loans you want to consolidate
- Quotes or a scope of works if the money is for a renovation
- A short note on what the extra borrowing is for and roughly how much you need
Questions people ask
- How much can I borrow against my home?
- It depends on your lender, the value of the property and your income. Lenders look at how much is already lent compared with the home's value and keep a margin, and they check that your income covers the repayments on the larger loan. A mortgage broker or lender can tell you what applies to you.
- Is a top up the same as refinancing?
- Not quite. A top up adds borrowing to your existing loan, usually with the same lender. Refinancing moves the whole loan to a different lender, and the two can happen together. A mortgage broker can compare the routes for you.
- Can I use a top up to pay off other debts?
- Often, yes, and it is a common reason for a top up. Spreading short term debt over a long mortgage term lowers the repayments but can mean paying more interest overall, so it is worth understanding the trade-off before you go ahead.
- Will I need a valuation?
- Usually the lender will want to confirm what your home is worth, either with a full valuation or a lighter estimate. Which one depends on the lender and the size of the loan.
- Does a top up change my existing rate?
- It depends on the structure. The new borrowing can be added to an existing split or set up as its own split, and that affects which rate and term apply to which part of the loan. A mortgage broker can explain the options.
Want a 60-second refinance check first? Our sister site Online Home Loans runs one.
Online Home Loans is part of the same group as Summit Mortgages. It is a separate site, so you will leave this one.
What happens next
- Tell us what you're looking to top up your mortgage for.
- We pass your details to a mortgage broker or lender who handles that kind of loan, so they can get in touch.
General information only, not advice. Mortgage advisers are usually paid a commission by the lender. If your loan settles, the adviser's business may pay Summit Mortgages a referral fee. It is not added to your loan and does not change what you pay.