How to Use Home Equity to Buy Your Next Property

What Is Home Equity (And Why It Matters)?

Home equity is the difference between what your home is worth and what you still owe on the mortgage. For example, if your property is valued at $700,000 and you owe $500,000, your equity is $200,000. Equity represents the portion of the property you own. Some borrowers choose to explore how equity may interact with future lending options.

Equity may change over time based on factors such as your loan balance and property valuations.


How Can You Use Equity to Buy Your Next Home?

Some lenders may take existing equity into account when assessing an application for additional borrowing. Lenders often allow you to access some of this equity through:
    • A line of credit secured against your home
    • A cash-out refinance of your existing loan
    • A loan top-up for the purpose of purchasing another property

This may reduce how much new savings are required, depending on lender policies and your circumstances. Some borrowers explore equity options rather than relying solely on savings, depending on their long-term plans

It’s also worth knowing that LVR limits vary between lenders and depend on the loan purpose and your financial profile. This information may help you understand what lenders consider when assessing applications involving equity.


What’s the Catch?

Using equity isn’t free money, it increases your total borrowing, and repayments. You’ll need to demonstrate you can service the larger loan, and understand any fees involved. Plus, you’ll want to get financial advice to ensure you're not overextending.
Pro tip: It’s best to have a clear plan; are you upsizing, investing, or relocating? A financial adviser can help you assess whether using equity aligns with your broader goals.


Ready to Think Big? We’ve Got Your Back

Your first home isn’t just a milestone, it can be a stepping stone. Whether you’re considering your next steps as a homeowner, or simply understanding what’s next, our First Home Buyer e-book can help. Inside you’ll find clear explanations of equity, refinancing, and how to plan your next move, plus checklists, calculators, and expert insights to guide you from deposit to keys, and beyond.

Download the free e-book now and understand the key concepts involved in planning future property decisions. Your future self will thank you.

Disclaimer:
 The information in this article is general in nature and does not constitute personal credit advice, financial advice, investment advice, tax advice, or legal advice. It does not take into account your objectives, financial situation, or needs. Accessing home equity and borrowing additional funds is subject to lender criteria, valuation outcomes, and individual circumstances. Any references to upgrading, purchasing additional property, borrowing strategies, market conditions, or potential benefits are illustrative only and not guarantees of outcomes. You should seek personalised advice from a licensed mortgage broker, financial adviser, and tax professional before making decisions about equity, refinancing, or further property purchases.
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