If you own a home in Adelaide, you may already have the deposit for your first investment property sitting in your equity — without needing to save a single dollar in cash. Here is how accessing equity for investment works and what you need to know to do it correctly.
Equity is the difference between your property's current value and what you owe on the mortgage. Usable equity is the portion you can actually borrow against — typically up to 80% of the property's value, minus your outstanding loan balance.
For example: if your home is worth $750,000 and you owe $400,000, your total equity is $350,000. Your usable equity is (80% of $750,000) minus $400,000 = $600,000 minus $400,000 = $200,000. That $200,000 is available to use as a deposit and purchase costs for an investment property.
There are two main ways to access equity for an investment purchase. The first is a cash-out refinance, where you refinance your existing home loan to a higher amount and take the difference as cash, which you then use as a deposit. The second is a split loan or line of credit, where you access the equity as a separate loan facility while keeping your existing mortgage intact.
Each approach has different implications for tax, cash flow and loan structure. The right choice depends on your income, tax position and investment strategy. Lendology works through these options with you before recommending a structure.
The way you access and use equity has significant tax implications. Interest on borrowings used to purchase an investment property is generally tax deductible. However, if you mix investment borrowings with personal borrowings — such as using the same account for investment expenses and private spending — you can contaminate the tax deductibility of the interest.
For this reason, keeping investment debt completely separate from your home loan is important. We structure the lending specifically to preserve clean tax deductibility, working alongside your accountant.
Once you have accessed the equity for a deposit, you still need to qualify for the investment loan itself. Lenders assess rental income (typically at 70-80% of the market rent) alongside your other income and existing debts. The investment loan is assessed independently of your home loan, so your combined debt position matters.
Lendology models the full scenario — both the equity release and the investment loan — before you make any commitment. You will know exactly what you can borrow, what the repayments look like, and how the investment affects your overall financial position.
Not if you have usable equity in your existing home. Equity can substitute for cash savings entirely, allowing you to invest without depleting your offset account or savings.
It adds debt secured against your home, which is a risk worth understanding clearly. If the investment property cannot service its loan — due to vacancy, unexpected costs or rate rises — you need to be able to cover the shortfall. Lendology stress-tests your position before recommending an investment strategy.
Yes. Once your first investment property has built equity, that equity can similarly be accessed to fund subsequent purchases. This is how many Adelaide property portfolios are built progressively over time.
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