How to Use Equity in Your Home to Buy an Investment Property in Australia
If you’ve owned your home for a few years, there’s a good chance it has increased in value. That growth creates equity — one of the most powerful tools Australian homeowners can use to build wealth through property investing.
In this guide, we’ll explain exactly what equity is, how you can access it, the benefits and risks of using it to purchase an investment property, and the steps to get started.
What Is Home Equity?
Home equity is the difference between your property’s current market value and the balance of your home loan.
For example:
Your home is valued at $900,000
Your current mortgage is $500,000
Your equity is $400,000
However, not all of this equity is usable. Most lenders allow you to access up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI). Using the example above, that means you may be able to access $220,000 as usable equity.
How Can You Access Your Equity?
There are several ways homeowners in Australia can use equity to fund their first or next investment property:
Refinancing your mortgage
Replace your current loan with a new one that allows you to release equity.
Often a good chance to secure a sharper interest rate.
Redraw facility
If you’ve been paying extra into your loan, you may be able to redraw the additional funds.
Works best for smaller investments or deposits.
Line of credit loan
Establishes a revolving credit facility secured against your equity.
Flexible, but requires strong discipline to avoid overspending.
Benefits of Using Equity for an Investment Property
No need for large cash savings – Your home’s value does the heavy lifting.
Leverage to build wealth – Equity allows you to purchase property sooner and grow your portfolio faster.
Tax advantages – Interest on the investment loan may be tax-deductible, and you may benefit from negative gearing and depreciation claims.
Potential capital growth – Over time, both your home and the new investment property could increase in value, boosting your overall net worth.
Risks You Should Consider
Higher debt levels – Borrowing more increases your monthly repayments.
Interest rate changes – Rising rates can impact affordability.
Property market fluctuations – Values may go down as well as up.
Impact on borrowing power – Accessing equity could reduce your ability to borrow for future purchases if not structured correctly.
It’s important to assess your financial position carefully and get professional advice before making a decision.
Steps to Get Started
Find out your property’s value
Request a property valuation or appraisal to confirm how much equity you have.
Review your current loan
Check your interest rate, loan features, and repayment terms.
Calculate how much equity you can access
Work out your usable equity (usually 80% of your property value minus your loan balance).
Talk to a mortgage broker
This is where we come in. At Radian Home Loans, we specialise in helping homeowners unlock their equity and structure their loans to purchase investment properties while keeping repayments manageable.
Final Thoughts
Using equity in your home can be a smart way to purchase an investment property and accelerate your financial journey. With the right strategy, you can leverage your existing asset to grow your wealth — but it’s essential to understand the risks and structure your loan correctly.
👉 If you’re ready to explore how equity could help you invest in property, contact Radian Home Loans today. Your journey to building a successful property portfolio starts here.