Your home’s equity can do the job a cash deposit does. Here’s how to work out how much you can access, and how to put it to work.
By the Chase Wealth Australia advisory team · Last updated July 2026
Work out your usable equity →For most Australian homeowners, equity is the single largest pool of investable capital they hold, and it is often sitting idle while they save for a deposit they may already have.
This guide explains using equity to buy an investment property from first principles: what equity is, how much of it you can actually access, the five steps of an equity purchase, the loan structures that protect you and the one to refuse, and the risks stated plainly. It is written for Australian owner-occupiers weighing a first or second investment property, and every figure in it is shown, sourced and dated.
Home equity is your property’s current market value minus what you still owe on it. If your home is worth $800,000 and your loan balance is $500,000, you hold $300,000 of equity. It grows from two directions at once: every repayment reduces the loan, and every rise in your property’s value adds to the gap.
That second force has been doing quiet work. Brisbane’s median dwelling value rose 19.1 per cent in the year to May 2026 and Perth’s rose 25.8 per cent (Cotality, May 2026), and homeowners in most capital cities have seen years of growth compound behind them. In our client work we regularly meet homeowners who last checked their equity position when they settled, then discover the market has been building them a deposit ever since. Equity is not cash in an account, and it is not income. It is borrowing capacity: a store of value a lender will let you put to work under clear rules, which the rest of this guide sets out.
Usable equity is the portion of your equity a lender will actually let you borrow against. Most Australian lenders will lend up to 80 per cent of your property’s value without lenders mortgage insurance, so your usable equity is 80 per cent of the property’s value minus your current loan balance.
That percentage is applied to the lender’s valuation, not to what an agent says the place is worth, and the two are rarely the same number. See how a bank valuation differs from market value and what the gap does to your usable equity.
As a formula: usable equity = (property value × 0.80) − current loan balance.
Total equity and usable equity are different sentences. “You have $400,000 in equity” describes your net position; “you can access $220,000” describes what a lender will release. A $900,000 home with a $500,000 loan holds $400,000 of total equity, but 80 per cent of $900,000 is $720,000, so the usable portion is $220,000. The loan balance relative to 80 per cent of value drives the answer, not the headline equity figure.
Two qualifiers matter. Lenders can go above 80 per cent, up to about 90 per cent, if you pay lenders mortgage insurance; that is an acceleration option with a real cost, covered in the structures section below. And having usable equity does not mean a lender will release it: serviceability, your income against your commitments, is assessed before anything is approved. The 80 per cent figure is the standard planning assumption because it avoids LMI and leaves a buffer in the security.
To work out your usable equity, enter your property value and loan balance into the Equity Unlock Calculator; it shows total equity, usable equity and what that figure could fund.
Using equity to buy an investment property means borrowing against your home to fund the deposit and purchase costs on the new property, instead of saving them in cash. Your home loan increases by the amount you release, the investment property carries its own loan, and rental income helps carry the combined repayments. The process runs in five steps.
Be clear-eyed about what the whole position looks like. Release $200,000 against your home to buy a $700,000 investment property and your total debt rises by $700,000: the $200,000 top-up plus a $500,000 loan on the new property. The bank assesses your servicing on all of it, at your actual rate plus APRA’s 3 percentage point buffer, before anything settles. That assessment is the real gate in 2026, and it is why the structure and lender choice in step three deserve as much attention as the property in step four.
As a rule of thumb, you need enough usable equity to cover a 10 to 20 per cent deposit plus roughly 5 per cent of the purchase price in costs such as stamp duty, legal fees and inspections. On a $600,000 investment property, that means $90,000 to $150,000 of usable equity. Here are the bands at three common price points:
| Purchase price | Deposit (10 to 20%) | Costs (~5%) | Usable equity needed |
|---|---|---|---|
| $500,000 | $50,000 to $100,000 | $25,000 | $75,000 to $125,000 |
| $600,000 | $60,000 to $120,000 | $30,000 | $90,000 to $150,000 |
| $700,000 | $70,000 to $140,000 | $35,000 | $105,000 to $175,000 |
Two notes on the costs line. Stamp duty is the biggest item and investors pay the full rate with no concession in either state: $20,025 on a $600,000 Queensland purchase and $24,890 on a $650,000 Western Australian one (state revenue office scales, 2026). And a 10 per cent deposit attracts lenders mortgage insurance, which stretches your equity further at a genuine cost, covered under structures below.
Where you sit in the band depends on the deposit you run. At 20 per cent down you avoid LMI and hold a stronger buffer; at 10 per cent you enter sooner and pay for the acceleration. See what your usable equity covers with the Equity Unlock Calculator.
Here is the maths in full, using the same figures you will find in the Equity Unlock Calculator. Take a homeowner with a property worth $800,000 and a loan balance of $500,000.
Now run it forward. Using the 10 to 20 per cent deposit plus 5 per cent costs rule, $140,000 of usable equity funds the deposit and purchase costs on an investment property in the $550,000 to $700,000 range. At the conservative end, that is a 20 per cent deposit on a $550,000 property with costs covered; at the stretch end, a 10 per cent deposit on $700,000 with lenders mortgage insurance in the mix.
That range matters because of where it lands. In the corridors Chase Wealth Australia buys in, the band covers Perth entry suburbs such as Armadale, at a $630,000 median (REIWA, year to June 2026), and at a 10 per cent deposit it reaches Ipswich entry suburbs like Leichhardt and One Mile that sit under $700,000.
See your total equity, usable equity and indicative purchase range in under a minute.
Open the Equity Unlock CalculatorThere are four ways lenders release equity. The first two are standard, the third buys flexibility at a higher rate, and the fourth is the one experienced investors refuse by name.
You ask your existing lender (or refinance to a new one) to increase your home loan up to 80 per cent of the property’s value and take the difference in cash, usually at your home loan rate. Going above 80 per cent triggers lenders mortgage insurance, roughly $13,000 to $20,000 on a $650,000 property at a 90 per cent lending limit, usually capitalised onto the loan. Treat it as a priced decision, not a default.
Best for: homeowners happy with their current lender who want the simplest path. Watch out: a top-up folded into your existing loan muddies deductibility. Ask for the released amount as its own account.
The released equity sits as a separate split alongside your home loan: same security, its own account and statement. The investment property still gets a standalone loan of its own. This is the industry default, because the split keeps the investment borrowing cleanly separated, which your accountant will want at tax time.
Best for: most equity purchases; it is the clean default. Watch out: confirm the split is priced correctly as investment lending. The purpose of the funds, not the security, drives the tax treatment.
An approved limit against your equity that you draw as needed, paying interest only on what you use. Same maths as a split loan; the flexibility is the product.
Best for: investors staging multiple purchases who want funds on standby. Watch out: rates typically run higher than a standard split. If the funds have one purpose, a split is usually cheaper.
Cross-collateralisation means one lender holds both properties as security for both loans. Sell one property and the bank can direct part of the proceeds into the other loan. Every revaluation drags the whole portfolio through assessment. Worst of all, it can block equity access: your new property grows $100,000 and the bank still refuses the release because the other security did not move. Investors get stuck at two or three properties this way even when they bought well. To be precise: multiple loans with the same bank is not cross-collateralisation; it exists only when each property is pledged as security for the others. The fix is standalone loans per property.
Best for: the lender. Watch out: lending strategy matters as much as suburb selection. Refuse it. No bank explainer will warn you against it, because the products being crossed are its own.
You can use equity to buy a second property whether it is a holiday home, a future downsizer or an investment. The mechanics are identical: the release funds the deposit and costs. Our companion guide breaks down how home equity works when you buy a second property step by step. What changes is how lenders price the loan and how the tax office treats the interest, which both follow the property’s purpose.
If the second property is somewhere you will live or holiday, expect owner-occupied rates on that loan but interest that is generally not deductible. If it is an investment, lenders apply investor rates, which run higher (the average investor variable sat at 7.20 per cent in July 2026, with sharp rates from about 5.99 per cent, Finder loan database, 3 July 2026), and the interest is generally deductible against the property’s income. Deductibility follows the purpose of each dollar borrowed, which is exactly why the split structures in the previous section matter more on a second purchase, not less.
Structure decides your third property too. A second purchase done clean keeps every future option open: refinance one property, sell one, release equity from whichever grew. A second purchase done crossed hands those options to the bank. In our client work we see the structural choices made at property two decide how far a portfolio can go.
Using equity to buy an investment property increases your debt against both properties, lifts your repayments by the amount you draw, and thins your buffer if values fall. Those are facts, not fine print. The strategy is defensible because each risk has a structural answer, and the numbers are modelled before anything is signed.
One line governs all of it: just because you can does not mean you should. The bank saying yes is the start of the decision, not the end.
The deposit is the entry ticket. The asset decides the outcome. Two investors can release the same $140,000 and end up in very different positions ten years later, because the suburb, the property type and the price paid do the compounding, not the equity that opened the door.
Chase Wealth Australia’s property investment strategy concentrates on Brisbane and Perth, and the reasons are in the data rather than the brochure. Both cities pair strong population growth with rental markets that have little slack: Brisbane’s median dwelling value reached about $1.13 million in May 2026 after growing 19.1 per cent in a year, and Perth’s passed $1.05 million after growing 25.8 per cent (Cotality, May 2026), yet their growth corridors still carry entry prices that let a southern-state homeowner’s equity stretch materially further than it would at Sydney or Melbourne medians. Rents underwrite the holding costs: Brisbane vacancy sat at 0.9 per cent in May 2026 with rents up 6.6 per cent year on year, and Perth houses were leasing in around 16 days (REIWA, mid-2026).
Selection still decides everything inside those cities. That research is done in-house and answers to you, not to developers: nobody hands us stock to move, so nothing biases the shortlist. Lorraine and Colin, whose story sits among our client success stories, started with equity in their family home. Their experience is typical of what clients say when asked directly, and you can read more in our client testimonials. Across the 634 sales conversations Chase Wealth Australia analysed in 2026, borrowing capacity was the third most common obstacle raised, which is why a strategy session tests serviceability before it tests suburbs. If you want your numbers tested against real corridors, our Brisbane, Perth and Gold Coast advisors do exactly that in a strategy session. To see the shortlists themselves, read the best suburbs to invest in for 2026 in Brisbane and Perth.
The deposit is only part of the cash the second property needs. A common rule is a 20 per cent deposit plus roughly 5 to 7 per cent in buying costs, so budget around 25 per cent of the purchase price all in. On a $600,000 second property that is about $120,000 for the deposit and roughly $40,000 in costs. Stamp duty is the largest of those costs, and investors pay the full rate with no concession: about $20,025 on a $600,000 Queensland purchase and $24,890 on a $650,000 Western Australian one (state revenue office scales, 2026). The full deposit picture, including buying on a 10 per cent deposit with lenders mortgage insurance, is in the guide to how much deposit you need.
Before any of it, hold a cash buffer. The discipline experienced investors keep is 6 to 12 months of expenses set aside, so a vacant month, a rate rise or a lost job never forces a sale. Releasing equity increases the debt against your home, and the buffer is what keeps that debt comfortable rather than fragile.
Having usable equity is necessary but not sufficient. Before releasing a dollar, a lender tests your income against the new repayments at your actual rate plus a 3 percentage point serviceability buffer (APRA, reaffirmed June 2026). At a competitive investor rate near 6 per cent, that means you are assessed as if you were paying around 9 per cent. Plenty of homeowners hold the equity and still hear a no at the first bank they ask, because serviceability, not the deposit, is where the decision is really made.
The money side is usually solvable, because different lenders assess income differently, value the same home differently, and loan structure moves the answer. Much of this applies whether it is your second property or your first. If you are still on the first, buying your first investment property walks through the full process in order.
More practical guides in our Insights library:
A strategy session tests these numbers against your income, buffer and goals, and shows you what they could buy in Brisbane or Perth. Bring your calculator result and we will pressure-test it against live lending conditions and the corridors we buy in.
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The Chase Wealth Australia advisory team are property investment strategy specialists who help homeowners turn the equity in their home into an investment property. Their focus is equity-led portfolio building for investors across Queensland and Western Australia, backed by in-house suburb research across the Brisbane and Perth growth corridors. The advice answers to you, not to banks or developers: no lender sets the structure and no developer supplies the stock, so both the numbers and the shortlist answer to the client alone. Read about the firm.
The numbers in this guide are general information; a strategy session is where they become yours.
