Mortgage top-ups a deceptive debt

It appears at the bottom of a National Bank mortgage reminder as an innocuous postscript that could be the key to that new car, house extension or winter trip to Fiji.

"PS: As a special offer, if you want to apply for a top-up to your loan, we'll reduce the $250 top-up fee to $100, so long as you do so before 17 May 2005."

A top-up sounds tempting if you're not thinking of moving, but want to cash in on the rising value of your pride and joy which, according to the Real Estate Institute's February figures, was worth 16.5 per cent more than it did a year ago.

The ASB Bank does not break out figures showing how much of their loan business comes from top-ups, but chief economist Anthony Byett believes there is a lot of it going on.

Latest lending figures from the Reserve Bank would suggest a lot of people are giving in to that temptation. Its figures show household debts topped $116.8 billion in the past year, up 15.1 per cent on the year before.

"We know that it's definitely happening," Mr Byett said.

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