Thinking about growing your property portfolio? If you’ve built up some equity in your home—either by paying down your loan or riding the wave of rising property values—you could be in a great position to take your next step: investing.
Using your equity is a popular strategy with many of our Perth clients, but like anything finance-related, it’s important to weigh up the pros and cons before diving in. Here’s what you need to know, and how we at Fox Mortgages can help.
First things first – what is equity?
Your home equity is the difference between what your property’s worth and what you still owe on the mortgage.
Say your Perth home is valued at $1,000,000 and you’ve got $200,000 left on the loan. That means your total equity is $800,000.
But not all of that is immediately available. Lenders typically let you access up to 80% of your property’s value, minus what you still owe. That’s what we call usable equity.
Example:
- 80% of $1,000,000 = $800,000
- Less your remaining loan of $200,000 =
- $600,000 in usable equity
Need more? Some lenders will allow you to borrow above 80% with Lender’s Mortgage Insurance (LMI), depending on your situation.
Why use equity to invest in property?
Tapping into your equity can fast-track your journey to building wealth through property. But it’s not one-size-fits-all—what works for one person may not suit another.
Here’s what we’ve seen from helping hundreds of local clients:
✅ The Upside
- No need to save a big deposit
Your equity is the deposit—so you may be able to get into your next property sooner. - Potential tax perks
Investment properties come with possible tax deductions—think interest repayments, property management fees, and maintenance. Plus, strategies like negative gearing may work in your favour. - Build your portfolio faster
Owning more property means more potential for capital growth and rental income. - Access to larger loans
Equity can help boost your borrowing power beyond just income and savings.
⚠️ The Watchouts
- Bigger debt = bigger responsibility
You’ll have more to repay—so you’ll want to be sure it fits your budget and lifestyle. - Market fluctuations
If values drop, it could impact your equity—and in some cases, leave you owing more than your property is worth. - Tax implications
Capital Gains Tax can apply when you sell. That’s why we always suggest chatting with your accountant early on.
How can you unlock your equity?
There are a few ways to go about it, and we can guide you through the best option for your situation:
1. Refinance
Refinancing lets you access equity by replacing your current home loan with a new one—often with better features or a lower rate. The equity you access can then be used as a deposit on your investment property.
2. Top-Up Your Loan
A simple increase on your existing mortgage to access funds for your next purchase. Quick and often flexible.
3. Cross-Collateralisation
You use your existing property to secure the loan on your new investment. It can be effective, but it ties the properties together—so make sure it’s right for your long-term plan.
4. Line of Credit
This works like a credit card secured by your property. You’re approved for a certain amount, and only pay interest on what you actually use.
Ready to take the next step?
Using your home equity to invest can be a game-changer—but it’s important to get the strategy right. At Fox Mortgages, we take the time to understand your goals and walk you through your options in plain English.
Whether you’re just curious or ready to go, we’re here to help you take confident, informed steps toward your financial future.
📞 Book an appointment today — or give us a call.