Increase your loan amount or loan term (2024)

FAQs

What increases your total loan balance answer? ›

Factors to keep in mind. The primary factors that increase your total loan balance are loan interest, recapitalized interest, fees, and variable interest rates.

You may be able to extend the term of your loan, so you'd pay it back over a longer period. This means your repayments could be smaller, but you'd make more of them. You can only extend your loan term, if that loan term will stay under 30 years from your draw down date.

Interest rates

The loan agreement involves repaying the loan principal with interest. Depending on the loan structure, the interest rate tied to your loan can cause the loan balance to increase over time. In many cases, interest can compound over time through a process called interest capitalization.

The most common option is to refinance your loan with a new lender. This is when you essentially get a new loan to pay for the original one, typically with a better interest rate or different loan period.

When interest capitalizes, the unpaid interest is added to the principal amount of your student loan. Capitalization increases your loan's principal balance, and interest is charged on the new, larger balance.

If there is a top-up option available with your lender then your need for an increase on the personal loan amount is addressed right away. However, the decision to increase the amount of your current personal loan may negatively impact your credit rating. Discuss this with your lender before applying.

It may be possible to extend your existing loan, but it'll be at the lender's discretion and may cost you in interest and charges. Alternatively, you could consider transferring the debt to a different source of finance with lower interest rates, and spread the repayments over a longer timeframe.

A term of the loan refers to a loan that is given for a fixed duration of time and must be repaid in regular installments. These loans are usually extended for a longer duration, ranging from 1 year to 10 or 30 years.

Loan Term Example

Let's say you have a 15-year fixed-rate mortgage. The loan term will then be 15 years. During this time, the loan must be paid off or refinanced during the term. Your loan can last for any length of time – it just needs to be agreed upon by the lender and you as the borrower.

Loan Increase means any increase in the outstanding principal amount of the Loan made pursuant to a Loan Agreement Supplement. Sample 1Sample 2. Loan Increase means that portion of the Loan in excess of the Existing Loan. Loan Increase means a Term Loan Increase or Revolving Commitment Increase.

How do you increase the amount you can borrow? ›

To increase your borrowing power you must pay all your debts off. As your lender will look at how much money you already owe and will assess you accordingly. In addition to this, you should try to get a pay rise that the lender can see and see the potential of growth in you. You may also want to decrease your expenses.

Topping up your loan can extend the length of time it takes you to pay it off. This means you could be charged more interest overall. It's best to consider if you'll be able to maintain your payments over the long term.

You can change your rate or term.

In addition to adjusting your principal, it's possible to change both your interest rate and loan term when you take a cash-out refinance. This is in addition to taking cash out of your equity.

A longer-term loan has lower monthly payments, which may be a good option if you're on a tight budget or would prefer to direct your monthly cash flow toward other expenses. But keep in mind that a longer loan term means greater total interest costs.

Capitalized Interest (Capitalization)—Unpaid interest that has been added to the principal balance of a federal student loan. Future interest is charged on the increased principal balance, and this may increase the amount of your monthly payment and the total amount you repay over the life of the federal student loan.

Both Interest accrual and interest capitalization increases your total loan balance.

The more often a lender adds the interest to the principal loan balance, the more interest you (the borrower) will pay. And that can make the total loan balance increase quickly.

Payments that don't cover the interest usually increase your loan balance. The option to pause payments is sometimes seen as a benefit, but it's a potentially costly one. If you aren't making headway against your debt, you could explore debt consolidation, debt negotiation, or other debt solutions.