If you’ve owned your home for a few years, there’s a good chance you’ve built up some equity without even realising it. And as property prices shift and more Australians look for ways to grow their portfolios without draining their savings, tapping into that equity has become a go-to strategy. It’s a simple idea at its core: you borrow against the value of the home you already own, and use that money to help fund your next purchase. Many homeowners explore this option when upgrading, investing, or building long-term wealth, and for many, it becomes the stepping stone to owning multiple properties.
Before you jump in, it helps to understand exactly what equity is, how lenders allow you to use it, and the legal and financial steps involved. And because every property purchase comes with paperwork, contracts, and settlement requirements, this is also where having support from professionals can make a huge difference in keeping the process smooth and stress-free.
Understanding What It Really Means to Use Your Equity
Equity is simply the gap between what your home is worth right now and what you still owe on the mortgage. Imagine your home is valued at around $500,000 and you’ve paid your loan down to $200,000. That leaves you with $300,000 in equity. It’s money tied up in your home, but accessible if a lender agrees that you have enough borrowing power to pull some of that value out.
Using equity doesn’t mean selling your home or giving anything up. It’s more like unlocking a portion of value that you’ve built over time. Lenders see your home as security, which gives them confidence to approve an additional loan or extend your current mortgage. People use equity for many things—buying an investment property, upgrading to a larger home, or even securing a holiday place they’ve always dreamed about. It can be a clever strategy, as long as you understand how much you can use and what it means for your future repayments.
Figuring Out How Much Equity You Can Actually Borrow
It’s normal to assume that if you have $300,000 in equity, you can use all of it. But lenders don’t see it that way. They typically allow you to borrow up to about 80% of your home’s current value without triggering Lenders Mortgage Insurance (LMI). Using the same example—your $500,000 home can generally support borrowing up to $400,000. If you still owe $200,000, that means around $200,000 may be accessible to put toward a new purchase.
Some people do choose to borrow above that 80% mark, but doing so usually means paying LMI, which can be a hefty added cost. This is why many homeowners sit down with a lender or financial adviser first to understand exactly what they can comfortably afford to take on. It takes some planning, especially if you want to make sure your day-to-day lifestyle isn’t affected by higher repayments.
Weighing the Benefits and Risks Before You Dive In
Using equity to buy property can open doors you never thought you could afford. One of the biggest drawcards is not needing a big cash deposit. Instead of saving tens of thousands of dollars all over again, you lean on the value already sitting in your current home. If both your properties rise in value, the long-term gains can build faster than relying only on savings.
There are also potential tax benefits if you’re purchasing an investment property, because in some cases, interest payments may be tax-deductible. And since you already own one property, lenders sometimes offer better loan terms because they see you as a lower-risk borrower.
But the strategy isn’t without its downsides. Borrowing against equity means your total debt increases, and that translates to higher repayments—sometimes significantly higher. If interest rates rise or your income changes unexpectedly, you could feel the pressure. And while property often grows in value over time, markets do fluctuate. A decline could reduce your equity and affect your ability to refinance or borrow later on. This is why a good financial plan, combined with solid legal advice, becomes important.
How Homeowners Actually Access Their Equity
There are several ways lenders allow you to unlock the equity in your home, and the best choice depends on your goals and your current financial situation. Some people simply increase their existing loan with their current bank, which can be straightforward if you’re already happy with the terms. Others prefer a home equity line of credit, where you can dip into the funds as needed, almost like a credit card secured by your property.
Refinancing with a new lender is also an option, especially if you want better rates or more flexible features. It’s a chance to reassess your entire loan structure and ensure you’re getting the best deal possible. However, with any of these options, make sure you’re aware of the fees, potential discharge costs, and changes to your repayment schedule.
When homeowners in Queensland start preparing to buy a new property, many also get early legal guidance, especially if they plan to move quickly once finance is approved. Some choose to consult firms experienced in property purchase conveyancing North Lakes, to understand the legal side of unlocking equity and securing a new contract.
The Legal Steps You’ll Need to Follow
Using equity to buy property comes with its fair share of legal paperwork, and it’s important to handle each step properly to avoid delays or complications later. Lenders usually begin with a professional valuation of your home so they can confirm its current market worth. This valuation is the key factor in determining how much equity you can access.
Once that’s done, you move into the loan application phase, which means supplying financial documents like proof of income, lists of assets, and other information showing your ability to repay the debt. If the lender approves the application, you’ll review and sign a new mortgage agreement outlining the terms.
If your goal is to buy another property with that equity, a conveyancer or solicitor becomes essential. They prepare, check, and manage all the legal documents needed for your purchase, guide you through contract conditions, and handle the settlement process. Working with trusted conveyancing lawyers in North Lakes, gives many buyers peace of mind because they know every detail—from contract review to settlement day—will be handled correctly.
A knowledgeable conveyancer doesn’t just tick boxes; they spot issues that could delay your settlement or put you at risk, and they ensure the transfer is lawful and streamlined. When dealing with large sums of borrowed equity, this guidance becomes even more important because it protects both your legal and financial interests.
Final Thoughts
Using equity to buy property can be a smart and practical way to grow your wealth, step into the investment world, or finally make the move into a home that better fits your lifestyle. It’s a powerful tool when used responsibly, but it does require a clear understanding of your borrowing capacity, your long-term financial plans, and the legal responsibilities that come with the process.
Whether you’re accessing equity for the first time or planning a more complex purchase, getting the right support—from lenders, financial advisers, and experienced conveyancers—can make all the difference in your experience. With the right guidance, using equity can feel less like a complicated financial manoeuvre and more like a natural next step in your property journey.
Author Bio: Jeryl Damluan is a seasoned SEO Specialist and Outreach Specialist. She excels in building authority links and amplifying online presence for law firms and businesses through strategic content creation and digital marketing.