Why equity is a powerful tool for property investors.

If your home has increased in value or you’ve made solid progress paying down your mortgage, you could be sitting on a powerful tool to build wealth—your home equity.

At FinancePath, we help everyday Australians turn their equity into opportunity. Whether you're looking to purchase your first investment property or expand your portfolio, understanding how to leverage your equity can be a smart move toward long-term financial freedom.

What is home equity?

Your home equity is the difference between your property’s current market value and the balance remaining on your home loan. For example, if your home is worth $1,000,000 and you owe $200,000, your total equity is $800,000.

But not all equity is created equal. Lenders typically allow you to access up to 80% of your property’s value, minus your existing loan. That’s your usable equity—and it could be the key to funding your next investment.

Why use equity to invest in property?

Using your equity to invest can fast-track your financial goals. Here’s why many of our clients choose this strategy:

• No need for a cash deposit: tap into your existing equity to fund your next purchase—no need to save a separate deposit.
   
• Potential tax benefits: investment properties may offer tax advantages, including deductions on interest, property management fees, and maintenance costs. Speak with your accountant to explore strategies like negative gearing.
   
• Build long-term wealth: property investment can deliver capital growth and rental income, helping you diversify and grow your wealth over time.
   
• Boost your borrowing power: equity can increase your borrowing capacity, giving you access to higher-value properties than your income alone might allow.
   

What to consider before you dive in

• Higher debt load: you’ll be taking on more debt, so it’s crucial to ensure your cash flow can support both loans.
   
• Market fluctuations: a drop in property values could reduce your equity and impact your financial position.
   
• Tax implications: Capital gains tax may apply when you sell your investment property. Always seek tailored tax advice.
   

How to access your equity

There are several ways to unlock your equity, and the right option depends on your goals and financial situation:

• Refinance your home loan: refinancing allows you to replace your current loan with a new one, accessing your equity as part of the process.
   
• Top up your existing loan: increase your current mortgage limit to access funds for your investment deposit.
   
• Cross-collateralisation: use your current property as security for your new investment loan. This strategy can streamline approvals but comes with added complexity.
   
• Line of credit: set up a flexible line of credit secured against your home, giving you access to funds as needed—only paying interest on what you use.
   

Ready to make your equity work harder?

At FinancePath, we specialise in helping Australians unlock their equity and make confident, informed investment decisions. Whether you're just starting out or growing your portfolio, our expert mortgage advisors are here to guide you every step of the way.

Let’s chat about your investment goals—book a free consultation today.