Though we have made our reputation as mortgage brokers, we also handle personal loans for our Kwinana clients. When a homeowner comes in asking for a personal loan, we ask them if they have any equity in their homes. If they do, they may be able to obtain a top-up mortgage instead.

What is a top-up mortgage? A top-up mortgage is a second loan added to the top of your current mortgage. If you have equity in your home and your payment record is good, your lender may loan you funds at the same rate as your mortgage. People take out top-up mortgages for such expenditures as a new car, debt consolidation, home renovations or for use as a down payment for an investment property.

The amount your lender will allow you to borrow will depend upon your current financial situation and the amount of equity you have built in your home. The assessment process will be exactly the same as when you obtained your home loan. The lender will assess your ability to make your loan repayments. You may want to pay off a few debts before asking for the loan.

Pros and Cons

There are two advantages to a top-up mortgage . The first is that mortgage rates are always lower than personal loan or auto loan rates. The second is that it is added onto the mortgage you already have.

There are two disadvantages. The first is that people often get into a cycle of borrowing their equity and never pay their homes off. The second is that some lenders charge a large establishment fee.

Call Smartline Rockingham

If you need a home loan, a personal loan or want to know if a top-up mortgage is your best option, call Smartline Rockingham. We have access to most major lenders and can tell you whether a personal loan or a top-up loan will be your best option.

Call (08) 9527 1800 today.