How Equity Can Help You Buy an Investment Property

Equity is simply the difference between what your property is worth and what you owe on it. It can allow you to enter the investment market without relying solely on savings or a large cash deposit.

In most cases, lenders allow you to access up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI), subject to assessment.

This means a portion of your home’s value may be used toward an investment property purchase.

For example, if your home is worth $1,000,000:

• 80% value = $800,000

• Current loan balance = $550,000

• Available equity = $250,000

Key benefits of using equity to purchase an investment property:

• Enter the property market sooner, rather than waiting years to save

• Keeping cash savings for unexpected or emergency expenses

• Possible tax benefits, depending on how the loan is structured

• Long-term property growth to support future financial goals

• Rental income that may help offset loan repayments

Whether a property is negatively or positively geared will depend on rental income, interest rates, and expenses, and will always be assessed based on your personal circumstances.

If you’d like to explore this option further, we’ve put together a page that explains how using home equity for an investment property works.

Click here