- Usable equity is roughly 80% of your property’s value, minus what you still owe
- You can access it by refinancing, a loan top-up or a line of credit
- Equity can fund the deposit and costs on the next purchase without selling
- Borrowing against equity still has to pass a serviceability test — and carries real risk
For most investors, the hardest part of buying a second property isn’t finding the deal — it’s finding the deposit. What many don’t realise is that they may already be sitting on it. As your home or first investment grows in value and your loan balance falls, the gap between the two becomes equity — and that equity can often be put to work as the deposit on your next purchase.
What equity actually is
Equity is simply the difference between what a property is worth and what you still owe on it. If your home is worth $800,000 and your mortgage is $400,000, you have $400,000 of equity on paper. But not all of that is accessible — lenders will only let you borrow against part of it.
Usable equity — the 80% rule
As a rule of thumb, lenders let you borrow up to 80% of a property’s value without paying Lenders Mortgage Insurance. So on that $800,000 home, 80% is $640,000. Subtract the $400,000 you still owe and you have $240,000 in usable equity. That figure — not the full $400,000 — is what you can realistically deploy toward the next purchase.
How to access it
There are three common paths: refinancing to a new, larger loan and taking the difference in cash; a loan top-up or supplementary loan with your existing lender; or a line of credit secured against the property. Each has different rate and flexibility trade-offs, and the right one depends on your lender, your goals and how you plan to use the funds.
“Equity is the quiet engine of most property portfolios. Used with discipline, it lets one good decision fund the next.
— Meridian Research
The risks to respect
Borrowing against equity is still borrowing. The new lending has to pass a serviceability test, so income and expenses matter as much as the equity itself. Be wary of cross-collateralisation — tying multiple properties to one loan structure can limit flexibility later. And remember that leveraging equity increases your total debt and your exposure if values move against you.
The Meridian view
Used carefully, equity is what turns a single property into a portfolio — it lets a first good decision compound into the next. The key is structure: the right loan setup, a genuine serviceability buffer, and a property chosen on fundamentals rather than convenience. This is general information only and not financial or credit advice; speak to a licensed broker or adviser about your specific situation.
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