Many homeowners assume they need years of saving before they can buy an investment property.
In reality, many Australians already have enough equity in their home to take the next step without using their savings.
If your property has increased in value over the past few years, you may be able to use some of that equity to fund the deposit and purchase costs for an investment property.
Understanding how equity works is often the first step towards building a property portfolio.
Investment Property Series
Understanding how equity can be used to purchase an investment property can help you build wealth sooner and avoid unnecessary delays.
Available guides:
✅ How Much Equity Do I Need to Buy an Investment Property?
✅ Can I Buy an Investment Property Without Using My Savings?
✅ Can I Use Equity Instead of a Cash Deposit?
✅ How Does Equity Work When Buying an Investment Property?
✅ Using Equity to Buy an Investment Property (Complete Guide)
What Is Equity?
Equity is the difference between what your property is worth and what you still owe on your home loan.
For example:
- Property value: $900,000
- Home loan: $500,000
Your total equity is $400,000.
However, not all of this equity is usually available to borrow against.
How Much Equity Can You Access?
Most lenders will allow you to borrow up to 80% of your property’s value without needing to pay Lenders Mortgage Insurance (LMI).
Using the example above:
- Property value: $900,000
- 80% of value: $720,000
- Existing loan: $500,000
Potential usable equity: $220,000
This equity may be used towards the deposit and purchasing costs for an investment property.
The amount available will depend on your property’s value, existing loan balance and your borrowing capacity.
Is $100,000 Enough Equity?
In many cases, yes.
Depending on the purchase price, $100,000 of usable equity may be enough to cover:
- A 20% deposit
- Stamp duty
- Legal costs
- Loan establishment costs
Every situation is different, but many clients are surprised by what may already be possible.
Can You Buy Without Using Your Savings?
Potentially.
One of the biggest misconceptions is that you need cash sitting in the bank.
Many investors use equity in their existing home instead of a cash deposit.
This allows them to preserve their savings while using the value already built up in their property.
Whether this strategy is suitable depends on your individual circumstances, borrowing capacity and long-term goals.
What Else Do Banks Consider?
Having sufficient equity is only one part of the assessment process.
Lenders will also review:
Even if you have significant equity, you still need to demonstrate you can comfortably afford the additional loan.
If you’d like to understand how lenders assess these areas, read our Home Loan Assessment Series.
Common Equity Myths
“I Need a 20% Cash Deposit”
Not necessarily.
Many investors use equity instead of cash for the deposit.
“I Have Plenty of Equity, So I’ll Definitely Be Approved”
Not always.
Borrowing capacity remains just as important as available equity.
“Using Equity Means Selling My Home”
Not at all.
Using equity simply means borrowing against part of the value you’ve already built in your property.
You continue owning your home as normal.
Why Work With a Mortgage Broker?
Using equity isn’t just about finding a lender with a competitive interest rate.
It also involves:
- Calculating usable equity
- Structuring loans correctly
- Comparing lender policies
- Protecting future borrowing capacity
- Planning for future investment purchases
A well-structured loan today can make it much easier to purchase additional properties in the future.
The Bottom Line
Many homeowners already have enough equity to purchase an investment property without realising it.
The key is understanding how much usable equity you have, whether your borrowing capacity supports another purchase and how to structure the lending correctly.
If you’ve owned your home for a few years, it may be worth exploring what options are available before spending years trying to save another deposit.
We Can Help You Make the Right Move
Budget announcements can create uncertainty, especially when housing, lending and property investment are involved.
Whether you are buying your first home, reviewing your current lending or planning your next investment purchase, understanding how these changes may affect your borrowing position is important.
We can help you assess your options and build a strategy that suits your goals and circumstances.
Book a strategy session:
Book an Appointment with Shoreline Lending
Visit our website:
Shoreline Lending
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@shoreline_lending
You can also contact us directly at:
hello@shorelinelending.com.au
(02) 4319 8173