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Using equity to buy another property

Read time 3 min
Thinking about upgrading your home or buying a second property? You can use your equity, the portion of your home you already own, instead of dipping into your savings.

What's the difference between equity and usable equity?

Equity is the part of your property that you own outright, sometimes called total equity.

Usable equity is the amount a lender lets you borrow and is what matters most when borrowing for another property. In most cases, this is up to 80% of your home’s value.

Calculate how much usable or total equity you have with our equity calculator.

Pros and cons of using your equity

You may be able to use your equity:

  • To help avoid paying LMI
  • To upgrade or invest in your home, or cover upfront costs like stamp duty and settlement fees
  • To help unlock a better interest rate as you build more equity in your home.

It’s important to keep in mind that if you use equity from your current home, that home may be used as security for your new loan. This links the two loans, so changes to one property or loan can impact the other.

Common questions

You can build equity by:

  • Making extra repayments on your home loan to reduce what you owe (if your loan allows it)
  • Using an offset account to reduce the interest you pay so more of your repayments go towards the loan balance
  • Renovating your home to increase its market value.

It depends on the price of the property you want to buy and how much equity you already have. Your equity will grow as you reduce the amount on your loan or if your property increases in value, which can help you work towards another purchase. Get in touch with our Home Lending Specialist to get a better understanding of your options.

You’ll usually need a 20% deposit to buy another property, and your usable equity can help cover some or all of that amount.

If your usable equity isn’t enough to reach a 20% deposit, you may need to make extra contributions to make up the difference and to cover any additional fees.

It’s a report that estimates how much a property is worth at a specific point in time, based on its condition, features and construction. It helps you understand your home’s value, how much equity you may have, and how much you may be able to borrow.

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