You may already have a deposit sitting in your home. Here is how to calculate your usable equity and access it for an investment property purchase.
One of the most common paths into investment property in Australia does not start with saving a new deposit — it starts with the equity already built in your home.
What Is Usable Equity?
Equity is the difference between your property's current value and your outstanding mortgage. Usable equity is the portion a lender will allow you to access — typically calculated as 80% of the property's value, minus your remaining mortgage.
Example
- Home value: $900,000
- Remaining mortgage: $400,000
- 80% of home value: $720,000
- Usable equity: $720,000 - $400,000 = $320,000
This $320,000 can be accessed without LMI and used as the deposit (and potentially purchasing costs) for an investment property.
How Equity Access Works
You access usable equity by either refinancing your existing home loan to a larger amount, or applying for a separate equity loan (sometimes called a home equity loan or line of credit) secured against your home.
The accessed funds are deposited into your account and used as the deposit for the investment property. You then take out a separate investment property loan for the balance of the purchase price.
Structuring It Correctly: Debt Separation
It is important that the loan used to purchase the investment property (and the equity drawn for the deposit) is kept separate from your owner-occupied home loan. This is because the interest on investment debt is tax-deductible, while the interest on your owner-occupied loan is not.
Mixing the two into a single loan structure — cross-collateralisation — complicates tax claims and can reduce your flexibility later. A good broker structures these as separate facilities from the start.
How Much Can You Borrow for the Investment Property?
Once you have accessed the deposit from your home equity, you apply for a separate investment loan for the balance of the investment purchase. Lenders assess your income, expenses, and existing debts — including your home loan — to determine serviceability.
Rental income from the investment property is included in the assessment, typically at 70–80% of the gross rent.
The Case for Interest-Only on Investment Loans
Many investors choose interest-only repayments on their investment loan, because the interest is fully tax-deductible and the lower repayments preserve cash flow. P&I repayments reduce your balance (principal is not deductible) and increase your cash outlay without additional tax benefit. Discuss this with your accountant before deciding. See our guide on interest-only vs P&I for a detailed comparison.
Ready to use your equity to invest? Contact Sam for a free assessment of your usable equity and investment loan options across 40+ lenders.
Frequently Asked Questions
What if my home has not increased in value — can I still access equity?
Yes, as long as your remaining mortgage is below 80% of the current value. Regular mortgage repayments build equity over time even without capital growth.
Does cross-collateralisation matter?
Yes — it gives the lender security over both properties and can limit your flexibility to sell or refinance one independently. Keeping loans separate is generally preferable.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.