Mortgage Top-Ups Explained: When and How to Use Them

At Properli, we understand that every homeowner’s financial situation is unique. Your home isn’t just a place to live, it can also be a powerful tool to help you achieve your goals. One way to leverage this is through a mortgage top-up. In this article, we explain what a top-up is, when it makes sense, and how to use it wisely in New Zealand’s property market.

1. What Is a Mortgage Top-Up?

A mortgage top-up (sometimes called a home loan increase) is when you borrow additional funds on top of your current mortgage using the equity in your property.

It’s essentially an extension of your existing loan same property, same lender but with a higher total balance. The new amount is added to your mortgage and repaid over time, usually at your current home loan rate.

“Topping up your home loan can be a smart way to give your home a refresh or consolidate debt to free up your cash flow. The key is making sure it’s structured the right way so it helps you move closer to your long-term goals, not further away. Getting the right advice can make all the difference” Sarah Kirkwood, Head of Advice at Properli.

2. How It Works

Let’s say your property is worth $900,000 and your remaining mortgage is $500,000.
That means you have around $400,000 in equity.

Most banks will allow you to borrow up to 80% of your property’s value so in this case, that’s up to $720,000 total. You could therefore “top up” your mortgage by up to $220,000, depending on your income, lending criteria, and financial situation.

3. When to Consider a Mortgage Top-Up

A top-up can be a smart move when used for value-adding or financially strategic purposes. Common reasons include:

• Home renovations or extensions – adding a deck, modernising a kitchen, or upgrading bathrooms can increase your property’s value and livability.
• Education costs – funding tertiary study or training without relying on higher-interest personal loans.
• Major purchases – such as a car, boat, or solar installation, where borrowing through your home loan saves on interest.
• Debt consolidation – combining high-interest debts (like credit cards or personal loans) into your mortgage to simplify payments and reduce costs.
• Purchasing a Property Investment – using equity to invest in another property or managed fund (with financial advice, of course).

4. When a Top-Up Might Not Be Right

A mortgage top-up isn’t free money, it increases your total debt and may extend your loan term. You might want to think twice if:

• You’re already struggling to meet current repayments.
• You plan to sell the property soon.
• The top-up is for short-term spending or lifestyle costs that don’t add long-term value.

5. How to Apply for a Mortgage Top-Up

Applying for a top-up is generally simpler than applying for a new loan, but your lender will still assess:

• Your income and expenses
• Current property value
• Loan-to-value ratio (LVR)
• Credit history and repayment record

Once approved, your lender can either:

• Add the top-up amount to your existing home loan; or
• Create a separate loan split so you can track and repay it independently (handy for renovations or debt consolidation).

Think about how you can make it work for you:

A mortgage top-up can be a powerful financial tool when used strategically, giving you access to funds at a lower interest rate while leveraging the equity you’ve built in your home.

At Properli, our Financial Advisers can help you understand whether a top-up fits your personal and financial goals. We’ll guide you through the process, compare lender options, and help you make informed decisions so you can confidently use your home’s equity to its fullest potential.