Home loan increase

How to use the equity in your home to pay off other debts, renovate and more – with a home loan increase.

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What is a home loan increase?

A home loan increase, also known as a top up, is one way to borrow extra money against your current property. If you have enough ‘usable equity’ in your home – and you can afford the additional repayments – it lets you raise your home loan’s limit to access extra money.

Why increase your BankSA home loan?

Consolidate debts, at home loan rates

You could pay off debts – like credit cards and personal loans – and pay a lower rate by bringing them into one increased home loan repayment.

Use your equity for big plans

The extra money can be put towards renovating to increase the value of your home, shares or even a deposit on an investment property.

Combine or separate repayments

Choose a separate account on a different loan term, or simply add your new loan amount to your current home loan repayments.

Buy something at home loan rates

Need a holiday or a new car? Use the extra funds, then increase your extra repayments to cover it in the short-term (rather than the life of the loan).

How do I apply for a BankSA home loan increase?

1. Check eligibility

Home loan increases are available with variable home loans, but not Relocation Loans (bridging loan) or self-managed super funds. You can increase your fixed rate loan by opening another loan account.

2. Estimate your usable equity

Usable equity = 80% of your home’s estimated market value, minus your current home loan balance. If your new loan-to-value ratio (LVR) is more than 80%, you may need to pay lenders mortgage insurance.

3. Gather your income documents

Have proof of income, like payslips, at hand so we can check if you can afford to make higher repayments.

4. Be up-to-date with repayments

Before applying, ensure your repayment history is in check, as we’ll all that into account.

5. We’ll call you for a chat

Request a call back by choosing ‘increase my home loan’ from the ‘I want to' drop down option. A home loan expert will be in touch within 2 business days, and we may need to carry out a valuation of your home.

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Tell me more

You'll need 'usable equity'

Equity = property market value - loan balance

The equity in your home is the difference between the market value of your home and your current home loan balance. But you won’t necessarily be able to borrow against all of your equity.

Usable equity = 80% of property market value - loan balance

If you’re ahead on repayments, or your home’s value has gone up, you may have ‘usable equity’ to allow for a top up. We calculate usable equity as 80% of the value of your property, minus your loan balance.

Example

Let’s say Kim's property is worth $900,000 and he has a $400,000 home loan. We'll calculate 80% of his home's value: 80% of $900,000 is $720,000. We’ll then subtract $400,000 (loan amount) to get Kim’s usable equity of $320,000.

Eligibility: we’ll also want to be comfortable that borrowers can afford the extra repayments, so we’ll also consider Kim's income, debts, expenses and liabilities.

Kim applies for a $36,000 home loan increase to buy a new car. He’s approved and now owes $436,000 at home loan interest rates. NOTE: if Kim wants pay off his car in 3 years, he should increase his home loan repayments by $1000 a month plus interest ($36,000 / 3 years = $12,000 per year).

What’s the difference between my loan limit and loan balance?

Your loan balance is the amount you currently owe, and are paying interest on.
Your loan limit is the combination of your balance and available credit (when you’re on Principal & Interest repayments, your limit reduces over time).

If your home loan limit increase is approved, interest will only be charged on your balance, not the new limit you have in place.

Estimate your higher repayments

Advantages and considerations

Advantages

Home loan’s generally have lower interest rates than other loans, plus it can be easier to manage one repayment.
You’ll only pay interest on your outstanding loan balance, not your higher loan limit.
Our application process can be simpler than applying for a new loan.
We’ve removed our top up fee.

Considerations

If you’re borrowing for an investment property, talk to your accountant about the potential tax implications.
More debt means more interest, and potentially higher home loan repayments.
There may be a valuation fee. And if you top up by opening a separate loan account, some loans may come with an establishment fee. To find out, request a call back and one of our lenders will call you back to chat.
You'll only enjoy home loan interest rate savings (compared to higher short-term loan rates) if you repay the extra debt within a comparable term. Let’s say, for example, that you buy a car with a $50,000 home loan top up instead of a $50,000 3-year car loan. If you don’t accelerate your home loan repayments to repay the extra $50,000 within 3 years, your car purchase will be spread over the life of your home loan – and you’ll end up paying more interest.

Can I use my equity to create a separate loan?

Yes you can. Instead of increasing your current home loan balance, we could simply set up another home loan account for you. This lets you get features that your current loan might not have, like a fixed or variable rate, an offset account or a different loan term.

Depending on your situation, there may be an establishment fee on your extra loan. To find out, request a call back and one of our lenders will call you back to chat through your options.

Paying off other debts

Let’s say you owe money on a personal loan and credit card with another bank, plus a BankSA home loan and new car loan. When you successfully apply to consolidate debts with a home loan top up, we'll use the additional funds to pay off all your non-home loan debt accounts for you – even the debts with other banks – then add the combined amount to your home loan balance.

Tips

Cancel the loans and credit cards you’ve paid out.
You'll only enjoy home loan interest rate savings (compared to higher short-term loan rates) if you repay the extra home loan amount within a comparable term. Let’s say, for example, that you consolidate a $50,000 3-year car loan into your home loan. If you don’t accelerate your home loan repayments to repay that $50,000 by year 3, your car purchase will be spread over the life of your long-term home loan – and you’ll end up paying more interest in total.
Do your best to pay off more than the minimum repayment amount, or you could end up paying compound interest (interest on interest). If you find yourself struggling, let us help you get back on top of things.

Renovating

Your top up could pay for renovations under $100k, like a kitchen, solar or insulating your home.

Our building option on our Standard Variable Rate Home Loan is designed for structural changes or for builds more than $100k. You’ll draw down funds progressively as you meet each building stage – so you’ll only be charged interest as your build progresses. We’ll set up a separate loan account for you, and we can manage the progress payments for you, giving you more control of your project.

Estimate your home rebuild costs

What can I use my home loan increase for?

How can I check my current home loan rate?

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Guides

Important information

Conditions, credit criteria, fees and charges apply. Based on BankSA’s credit criteria, residential lending is not available for Non-Australian resident borrowers. Interest rates subject to change. Before making a decision, it’s best to read the terms and conditions.

Loan Accounts – Charges for specific services and accounts (PDF 55KB)

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.

Home loan increases, also known as top ups, are subject to approval.

Other fees and costs (PDF 55KB) may apply. Talk with one of our lenders about a potential property valuer fee, or a lending establishment fee when you top up via a separate loan account.