Ask Boo: Can I top-up an existing loan?

This week, we’re answering a common question from people who’ve already borrowed money: can I top-up an existing loan? 

And there’s quite a simple answer to this question: yes you can, if you qualify.

There you go — end of blog post. 😂

What’s that, you want a little more information? Well OK, if you insist…

What is a top-up loan?

A top-up loan is a way of borrowing extra money when you’re already paying off the first loan. In a way, it tops up the amount you owe, hence the name.

For instance, if you took out a loan for £2,000 at the beginning of the year and then find you need to borrow an extra £1,000 towards the end of the year, you could “add” £1,000 to the outstanding balance of your £2,000 loan and pay those debts as one debt.

How does a top-up loan work?

It works just like any other loan. In fact, it is like any other loan.

While they’re known as top-up loans, they’re essentially just new loans you take out to cover your existing balance and the additional amount you want to borrow.

Going back to our example from earlier: let’s say you still owe £1,000 on your £2,000 loan (for the sake of easy maths) and you need another £1,000. Your top-up loan will be a loan of £2,000, with £1,000 going straight back to pay off the £1,000 you owe and £1,000 landing in your bank account.

Can I top-up an existing loan if I borrowed in the last 6 months?

Absolutely.

After you’ve made six months of timely repayments on your loan, you could be eligible for a top-up loan.

However, because a top-up loan is technically a brand new loan (like we just discussed) it is subject to the same credit checks as any other loan. That means that while you’re likely to qualify for a top-up loan, you’re not guaranteed to be able to borrow more money, especially if your circumstances have changed in the last 6 months.

So, there you have it, an answer to can I top up an existing loan, as well as a host of other questions about top-up borrowing in general.