How lenders work out usable equity, what you could buy with it, and how to structure the loans so they stay clean at tax time.
Anthony Nocon
Founder and Mortgage Broker, Financeo
Published
14 October 2026
Last revised
11 November 2026
Reading time
8 min read
TL;DRIn a nutshell
✓Usable equity: usually 80% of your home's value, minus what you owe.
✓Deposit source: equity can cover the deposit and costs on an investment.
✓Borrowing power: you still need the income to service both loans.
✓Structure: keep investment borrowing in a separate split for cleaner tax records.
Working out your usable equity
Equity is the difference between what your home is worth and what you owe. Lenders generally let you borrow up to 80% of the value without LMI, so that's the figure they work from.
Example: $1,000,000 home
80% of property value
The usual limit without LMI
$800,000
Less current loan
What you still owe
−$500,000
Usable equity$300,000
What that equity could buy
Using $300,000 as a 20% deposit plus purchase costs could put a property of around $1.2 million within reach, if your income supports the extra borrowing.
How equity funds the purchase
1
Revalue your home
The lender orders a valuation.
2
Release equity
A new loan split is set up against your home.
3
Pay deposit and costs
Funds cover the deposit, stamp duty and fees.
4
Loan for the rest
A second loan, secured by the investment, covers the balance.
Structuring the loans properly
Keep the investment borrowing in its own loan split, separate from your home loan. Mixing them makes it harder to show which interest is deductible.
"Structure is where most people lose money without noticing. Getting the splits right at the start saves a lot of untangling later."
Anthony Nocon, Financeo
Risks to consider
Borrowing against your home increases your total debt and puts your home on the line. Leave a buffer for vacancies, repairs and rate rises.
01
Cross-collateralising
Securing both loans against both properties limits your flexibility later.
02
Using all the equity
Leave room for unexpected costs.
03
Skipping tax advice
Speak with your accountant about ownership and deductions.
Quick self-check
Tick what applies to you. It's a rough guide, not an assessment.
Tick the boxes above to see where you stand.
Frequently asked questions
Yes. The lender will order one to confirm your home's current value before releasing equity.
This article is general information only and doesn't take your circumstances into account. Lending rules, rates and thresholds change, so check current details or speak with us before acting.
About the author
Anthony Nocon
Founder and Director of Financeo. More than a decade in lending, including commercial, business, property and private banking roles at Commonwealth Bank.
How lenders work out usable equity, what you could buy with it, and how to structure the loans so they stay clean at tax time.
Anthony Nocon
Founder and Mortgage Broker, Financeo
Published
14 October 2026
Last revised
11 November 2026
Reading time
8 min read
TL;DRIn a nutshell
✓Usable equity: usually 80% of your home's value, minus what you owe.
✓Deposit source: equity can cover the deposit and costs on an investment.
✓Borrowing power: you still need the income to service both loans.
✓Structure: keep investment borrowing in a separate split for cleaner tax records.
Working out your usable equity
Equity is the difference between what your home is worth and what you owe. Lenders generally let you borrow up to 80% of the value without LMI, so that's the figure they work from.
Example: $1,000,000 home
80% of property value
The usual limit without LMI
$800,000
Less current loan
What you still owe
−$500,000
Usable equity$300,000
What that equity could buy
Using $300,000 as a 20% deposit plus purchase costs could put a property of around $1.2 million within reach, if your income supports the extra borrowing.
How equity funds the purchase
1
Revalue your home
The lender orders a valuation.
2
Release equity
A new loan split is set up against your home.
3
Pay deposit and costs
Funds cover the deposit, stamp duty and fees.
4
Loan for the rest
A second loan, secured by the investment, covers the balance.
Structuring the loans properly
Keep the investment borrowing in its own loan split, separate from your home loan. Mixing them makes it harder to show which interest is deductible.
"Structure is where most people lose money without noticing. Getting the splits right at the start saves a lot of untangling later."
Anthony Nocon, Financeo
Risks to consider
Borrowing against your home increases your total debt and puts your home on the line. Leave a buffer for vacancies, repairs and rate rises.
01
Cross-collateralising
Securing both loans against both properties limits your flexibility later.
02
Using all the equity
Leave room for unexpected costs.
03
Skipping tax advice
Speak with your accountant about ownership and deductions.
Quick self-check
Tick what applies to you. It's a rough guide, not an assessment.
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Frequently asked questions
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This article is general information only and doesn't take your circumstances into account. {{ discText }}
About the author
Anthony Nocon
Founder and Director of Financeo. More than a decade in lending, including commercial, business, property and private banking roles at Commonwealth Bank.
