Rising property prices across Australia mean more buyers are looking for ways to borrow 100% of a home’s purchase price – plus purchase costs. While this is possible, the way you structure that borrowing makes all the difference between a smart financial move and an expensive mistake.
At Borro, we help clients access full-value lending through a clear, strategic approach: the 80/20 split. This structure lets you borrow 100% while avoiding unnecessary costs and keeping your properties separate. Here’s how it works and why it matters.
What the 80/20 Split Actually Means
The 80/20 borrowing structure uses two separate loans to fund your purchase:
Loan 1: The 20% Cash-Out Loan
This loan is taken against your existing property. It provides the 20% deposit plus purchase costs like stamp duty and legal fees. Importantly, this loan is secured only by your first property.
Loan 2: The 80% Purchase Loan
This is a standalone home loan for 80% of your new property’s value. It’s secured only against the property you’re buying, not your existing home.
Together, these two loans give you 100% of the purchase price without tying your properties together. Each loan stands on its own, with its own security.
How This Structure Avoids Cross-Collateralisation
Many borrowers don’t realise that taking out a single 100% loan often results in both properties being held as security by the lender. This is called cross-collateralisation, and it creates complications down the track.
When properties are cross-collateralised, the lender treats them as one security pool. This makes it harder to sell one property, refinance, or restructure your loans later. You lose flexibility and control.
The 80/20 approach keeps two separate loans with two separate securities. Your existing property secures the 20% loan. Your new property secures the 80% loan. Nothing is tangled together, giving you more control and reducing risk.
Why This Helps You Avoid Lenders Mortgage Insurance
Lenders Mortgage Insurance (LMI) is charged when you borrow more than 80% of a property’s value on a single loan. It can cost tens of thousands of dollars.
With the 80/20 structure, your main purchase loan stays at 80% LVR, sitting just below the LMI threshold. The cash-out loan is secured separately by your existing equity, so it doesn’t impact the LVR of your purchase property. This saves you significant money upfront.
Who This Structure Works Best For
The 80/20 split is particularly useful for:
Homeowners wanting to upgrade without needing cash savings for a deposit
Property investors who want to preserve liquidity and keep their properties separate
Borrowers seeking full purchase financing without sacrificing flexibility or control of their assets
If you already own property with available equity and want to buy again without draining your savings or paying LMI, this structure is worth exploring.
The Key Advantages
- Avoids LMI on the purchase loan, saving thousands of dollars
- Protects both properties by keeping securities separate
- Provides full purchase funding without needing cash savings
- Offers more flexibility in future for selling, refinancing, or restructuring
- More transparent and less risky compared to a typical 100% loan with cross-collateralisation
Making the Right Choice for Your Situation
Borrowing 100% can be done safely when structured well. The 80/20 split gives you clarity, control, and lower costs. It’s not the right fit for everyone, but for many Sunshine Coast buyers and investors, it’s a smarter way to access the financing they need.
At Borro, we take the time to understand your financial position, your goals, and your long-term plans. We’ll help you work out whether this structure suits your situation and guide you through the process with honest, straightforward advice.
Ready to explore your options? Get in touch with the Borro team to discuss whether the 80/20 borrowing structure is right for your next property purchase.
