Using the in your current home can be a powerful way to jumpstart an investment portfolio without needing a massive cash deposit. Essentially, you are leveraging the value you've already built to fund a new venture. 1. Calculate Your Useable Equity
The result is the amount you can potentially borrow for a deposit on a new property. 2. Get a New Valuation
You use your current home as security for the new loan. While this can be simpler to set up, many investors avoid it because it links both properties together, making it harder to sell one without affecting the other. 4. Factor in "Hidden" Costs how to buy a investment property using equity
You increase your current loan to get a lump sum of cash for a deposit.
Remember that "buying with equity" still involves . Your total debt will increase, meaning your monthly repayments will go up. You also need to ensure your equity covers: Stamp duty or land tax. Legal fees and conveyancing. Building and pest inspections . A "buffer" for maintenance or vacancy periods. 5. Assess Your Serviceability Using the in your current home can be
Even if you have $500k in equity, a bank won't lend to you if your can't support the higher loan repayments. They will look at your salary , existing debts , and the projected rental income from the new investment property to ensure you can afford the "buy-in." 6. Execute and Manage
Most banks use an rule. To find your "useable" equity: Take 80% of your home's current value . Subtract your remaining mortgage balance . Calculate Your Useable Equity The result is the
Once your finance is pre-approved, you can shop for an investment property as a "cash" buyer for the deposit portion. Once settled, the goal is for the and capital growth of the new property to outperform the interest cost of the equity you borrowed.