Using Equity to Buy Another Property

Once you’ve built equity in your home (through repayments and capital growth), you can use that equity to finance another purchase. Here’s how it works:

• Calculate usable equity:  Lenders often let you borrow up to 80 % of your property’s value minus your current mortgage. For example, if your home is worth $600,000 and your loan balance is $300,000, your equity is $300,000. Up to 80 % of $600,000 is $480,000, so your usable equity could be $180,000 ($480,000 – $300,000).

• Top‑up or separate loan:  You can increase your existing loan (a “top‑up”) or take out a separate loan secured by your property.

• Risks:  Leveraging equity increases your debt and may put your home at risk if you can’t repay. If property values fall, you could owe more than your home is worth. A broker can explain how banks calculate equity and the impact on your serviceability.