Spring is often seen as a season of fresh opportunities in the property market. If you already own a home, it could be the right time to look at what your equity can do for you.
Used wisely, equity can help you buy an investment property, renovate your home, or make your next big move sooner than you expected.
What Is Home Equity?
Equity is the difference between what your home is worth and what you still owe on your mortgage.
Example:
Property value: $1,000,000
Home loan balance: $200,000
Total equity: $800,000
That’s your total equity, but only part of it is actually usable.
What Is Usable Equity?
Lenders usually let you access up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI). Subtract your current loan balance, and what’s left is your usable equity.
Example:
80% of $1,000,000 = $800,000
$800,000 – $200,000 loan balance = $600,000 usable equity
That $600,000 is what you may be able to use toward your next property or other financial goals.
Read more: Understanding Loan-to-Value Ratio (LVR) in Home Loans
Using Equity to Buy Another Property
A common way to use equity is to fund the deposit for an investment property.
Let’s say you are buying an investment property for $750 000 and don’t have a deposit currently. Typically, a bank will want a 20% deposit = $150 000. You could access the equity in your current property to fund this.
Example Scenario:
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Current Valuation of Home: $850 000
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Current Home Loan: $400 000
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$850 000 x 80% = $680 000. $680 000 – existing debt of $400 000 = $280 000 of usable equity
Other Ways to Use Equity
Equity isn’t just for buying a second property. Many homeowners use it to:
Renovate their current home
Buy a holiday property
Consolidate debts into one loan
Help children enter the property market
The key is to use equity in a way that supports your long-term financial plan.
How to Access Your Home Equity
There are a few ways to unlock usable equity:
Refinance your home loan – increase your loan amount or change its structure
Apply for a loan top-up – add to your existing loan with your current lender
Take out a separate loan secured by your property
Explore your options: Mortgage Refinance.
The right option depends on your income, loan history, and your goals. A mortgage broker can guide you through the process.
What to Consider Before Using Equity
Using equity increases your debt, so it’s important to plan carefully. Before moving forward, make sure to:
Confirm your usable equity with a property valuation
Understand how repayments will impact your budget
Compare lenders and loan products
Consider future interest rate changes
This is where working with a mortgage broker can save time and money. At Borro, we review your full situation and guide you toward the most suitable loan structure.
Let’s Explore What Your Equity Can Unlock
You don’t have to run the numbers or negotiate with the bank on your own.
If you’d like to find out how much usable equity you have and how you can use it, our team is here to help.
Book your free equity assessment with Borro today and discover what opportunities are waiting for you.
FAQs – Home Equity and Property Investment
Usable equity is typically 80% of your property’s value, minus what you owe on your mortgage. A broker can confirm the amount after a property valuation.
In many cases, yes. Your usable equity can cover the 20% deposit, and sometimes upfront costs like stamp duty.
Not always. You may be able to do a loan top-up with your current lender, though refinancing can often give you more flexible options.
Using equity increases your debt. It’s important to check your repayment capacity and how future rate changes may affect your budget.
We compare lenders, run the numbers for you, and help you structure your loan so you’re using equity in a smart, sustainable way.
