Can I Use Equity Instead of a Cash Deposit?

Many homeowners believe they need a large cash deposit sitting in the bank before they can buy an investment property.

In reality, that’s not always the case.

If you’ve built enough equity in your existing home, you may be able to use some of that equity instead of a cash deposit, allowing you to purchase an investment property without saving another substantial amount of money.

Whether this is possible depends on your available equity, borrowing capacity and the lender’s requirements, but many homeowners are surprised to learn they’re closer to investing than they first thought.

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)

Can Equity Replace a Cash Deposit?

In many cases, yes.

Rather than using money you’ve saved over many years, you may be able to use the equity you’ve already built in your home to fund the deposit for an investment property.

This is a common strategy used by homeowners who have owned their property for several years and benefited from a combination of property growth and regular home loan repayments.

Whether this option is available will depend on your usable equity, borrowing capacity and the lender’s requirements.

How Does It Work?

Using equity instead of a cash deposit doesn’t mean withdrawing cash from your home.

Instead, your lender may allow you to borrow against part of the equity you’ve already built.

For example:

Property value: $900,000
Existing home loan: $500,000
80% of property value: $720,000

This could provide up to $220,000 of usable equity, subject to servicing and lender approval.

That equity may then be used towards the purchase of an investment property without needing to save another large cash deposit.

What Can Equity Be Used For?

Depending on your available equity and the lender’s policy, equity may be used towards:

The investment property deposit
Stamp duty
Legal and conveyancing costs
Loan establishment costs
Other eligible purchasing expenses

This can reduce or even eliminate the need to contribute your own savings towards the purchase.

Do You Still Need Borrowing Capacity?

Absolutely.

One of the biggest misconceptions is that having enough equity automatically means you’ll qualify for another loan.

It doesn’t.

Lenders will still assess:

Even if you have significant equity available, you still need to demonstrate that you can comfortably afford the additional lending.

If you’d like to understand how lenders assess these areas, read our Home Loan Assessment Series.

Common Equity Myths

“I Need to Save Another 20% Deposit”

Not necessarily.

Many homeowners already have enough equity in their existing property to fund the deposit and purchasing costs for an investment property.

The key is understanding how much usable equity you have available and whether your borrowing capacity supports the additional lending.

“Using Equity Means Selling My Home”

Not at all.

Your home remains yours.

Using equity simply means borrowing against part of the value you’ve already built in your property.

“If I Have Equity, I’ll Automatically Be Approved”

Unfortunately, no.

Lenders still assess your income, existing commitments, credit history and overall financial position before approving an investment loan.

Why Work With a Mortgage Broker?

Every lender has different policies around equity releases and investment lending.

A mortgage broker can help you:

Calculate your usable equity
Understand your borrowing capacity
Compare lender policies
Structure your lending correctly
Develop a strategy that supports future investment purchases

The right structure today can make it much easier to continue building your property portfolio in the future.

The Bottom Line

Using equity instead of a cash deposit can be an effective way to purchase an investment property sooner than you may have expected.

If you’ve built sufficient equity in your home, you may already have the funds needed for a deposit without touching your savings.

The key is understanding how much usable equity you have, whether your borrowing capacity supports another purchase and how to structure the lending correctly from the outset.

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

You can also contact us directly at:

hello@shorelinelending.com.au
(02) 4319 8173