Investment Property
Usable equity may potentially contribute toward the deposit and costs of purchasing another property, subject to lender assessment and borrowing capacity.
PROPERTY EQUITY
Accessing Equity in Your Property Could Open Up New Opportunities.
As your property value changes and your home loan balance reduces, you may build equity that can potentially be used for another property purchase, renovations or other approved lending purposes. We help you understand how much equity may actually be available and what accessing it could mean for your overall lending position.
WHAT COULD EQUITY BE USED FOR?
Turn the Equity You've Built Into Financial Flexibility
Accessing equity can serve different purposes, but the appropriate structure depends on your objectives, borrowing capacity and lender requirements.
Renovations
Equity may sometimes be accessed to fund renovations, extensions or improvements to your existing property.
Debt Consolidation
In some circumstances, higher-interest debts may be consolidated into home lending, although the overall cost and loan term should be considered carefully.
Other Approved Purposes
Depending on lender policy, equity may potentially be accessed for certain personal, investment or business purposes where appropriate.
HOW IT WORKS
From Property Value to Usable Equity
The equity shown on paper isn't always the same amount a lender will allow you to access.
1
Estimate the Property Value
Start with an indication of the current value of your property. A lender may ultimately require its own valuation.
2
Confirm the Existing Loan
We review your current home loan balance and any other lending secured against the property.
3
Determine the Proposed LVR
The amount accessible depends partly on how much total lending the lender is prepared to allow relative to the property's value.
4
Assess Borrowing Capacity
Having equity does not automatically mean you can borrow it. The lender will still assess income, expenses and existing commitments.
5
Confirm the Purpose
Lenders may apply different requirements depending on whether the funds are for another property, renovations, investment or another purpose.
6
Structure the Lending
Where appropriate, we can help structure the equity release separately from existing lending so the purpose and repayments remain easier to track.
TOTAL EQUITY VS USABLE EQUITY
The Difference Matters
Total equity is broadly the difference between your property's value and the debt secured against it.
Usable equity is the portion that may potentially be accessed while keeping the total lending within an acceptable loan-to-value ratio and meeting lender policy.
For example, owning a property with substantial equity does not automatically mean all of that equity can be converted into additional borrowing.
Calculate estimated usable equity →THREE THINGS A LENDER WILL CONSIDER
Equity is only one part of the assessment.
01
Current property valuation
02
Existing and proposed debt
03
Your ability to service the additional lending
IMPORTANT CONSIDERATIONS
Accessing Equity Also Means Increasing Debt
Equity can create opportunities, but the additional debt still needs to fit comfortably within your overall financial position.
Higher Repayments
Increasing your loan balance generally increases the amount of interest and repayments you may pay over time.
Purpose Matters
The way the borrowed funds are used can affect loan structure, lender requirements and potentially tax treatment.
Keep the Structure Clear
Separate loan splits can sometimes make it easier to identify which debt relates to which purpose.
This information is general only. Tax treatment depends on individual circumstances and should be discussed with a suitably qualified tax adviser.
RUN THE NUMBERS
Start by Understanding Your Position
These calculators can help you estimate equity, borrowing capacity and repayments before discussing a proposed loan structure.
WHY TULIP FINANCE
Equity Is Useful Only When the Structure Makes Sense.
Accessing equity can affect your existing mortgage, loan-to-value ratio, repayments and future borrowing position.
We can help you understand how much equity may be available, compare suitable lender options and structure the additional lending around the purpose you're trying to achieve.
Learn more about Tulip Finance →EQUITY LOAN FAQs
Common Questions About Using Equity
Understanding how equity works can make it much easier to plan your next financial move.
What is property equity?
Property equity is broadly the difference between the current value of a property and the debt secured against it.
What is usable equity?
Usable equity is the portion that may potentially be accessed while remaining within the lender's acceptable loan-to-value ratio and lending criteria.
Can I use equity as a deposit for another property?
Potentially. Subject to lender assessment, accessible equity may sometimes contribute toward the deposit and purchase costs of another property.
Can I access equity without refinancing?
In some circumstances, an existing lender may allow an increase or additional loan split. In other cases, refinancing may be considered. The available options depend on lender policy and your circumstances.
Do lenders require evidence of how the funds will be used?
They may. Cash-out and equity-release requirements vary between lenders, particularly for larger amounts or certain loan purposes.
Does having equity mean I will qualify for more borrowing?
No. A lender will still assess your income, expenses, liabilities and ability to meet repayments before approving additional lending.
THINKING ABOUT USING YOUR EQUITY?
Let's Work Out What's Actually Available.
We can review your property value, existing mortgage, proposed purpose and borrowing position to help you understand the options.
Information on this page is general in nature and does not take into
account your individual objectives, financial situation or needs.
Available equity, loan-to-value ratios, cash-out requirements and
lending criteria vary between lenders. Increasing your mortgage
increases your debt and may increase total interest costs. Please
refer to our Disclaimer and Credit Guide for further information.