Many investors buy their first investment property without saving a cash deposit. Instead, they use the equity built up in their own home. Done right, it's a powerful strategy. Done carelessly, it can create a tangled loan structure that's hard to unwind.
What usable equity is
Most lenders let you borrow up to 80% of your property's value without LMI. Your usable equity is:
80% of your home's value, minus your current loan
Example: - Home value: $1,100,000 - 80%: $880,000 - Current loan: $520,000 - Usable equity: $360,000
How much do you need for an investment?
To buy a $700,000 investment with a 20% deposit and no LMI, you'll need:
- Deposit: $140,000
- Stamp duty (NSW, no concession): roughly $26,000
- Legal, inspections and other costs: around $3,000 to $5,000
- Total: roughly $170,000
The remaining $560,000 is borrowed against the investment property itself.
The right way to structure it
Two separate loans against two properties
- Equity loan: a new loan split against your home for $170,000, used for the deposit and costs
- Investment loan: a loan for $560,000 secured against the investment property
Both loans are used for the investment, so the interest on both may be tax deductible. Your home loan stays separate.
Avoid cross-collateralisation
Some banks will suggest securing both loans with both properties. This can:
- Make it harder to sell one property without the bank revaluing both
- Make refinancing more complex
- Give the bank more control over your equity
We usually recommend stand-alone securities. Read more in cross-collateralisation.
Serviceability still matters
Equity gives you a deposit, but you still need to show you can afford both loans. Lenders count:
- Your income
- 70% to 80% of the investment's rent
- Repayments on both loans at a buffered rate
Valuations in 2026
With values falling in Sydney and Melbourne through 2026, your home may be worth less than a year ago. Get a realistic valuation before planning, and don't commit to a purchase until finance is approved.
Tax considerations
- Interest on the equity loan used for the investment is generally deductible
- Keep the equity loan separate and only use it for the investment
- From 1 July 2027, negative gearing is limited to new builds for properties purchased after 12 May 2026
Talk to your accountant before you start.
Frequently asked questions
Do I need to refinance my home to access equity?
Not necessarily. You can often add a new split with your current lender. Refinancing may get a better rate though.
Can I use equity for an interstate property?
Yes. The equity loan is secured against your home; the investment loan against the new property, wherever it is.
Can I use equity to buy a property for my children?
Possibly, but the tax treatment differs. If the property isn't income-producing for you, interest won't be deductible.
Want to see how much equity you can use? Call Finfident on 0424 545 654. We'll structure the loans cleanly from the start.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.