Using equity to buy an investment property can help you fund a deposit without saving it all again. But accessing equity usually means borrowing more. Before proceeding, check your borrowing capacity, combined repayments, financial buffer and the property itself. Having the ability to borrow does not automatically give you a good reason to borrow.
That distinction sits at the centre of a listener’s question to Massey and Felise in the 21 September 2026 Teach Me About Property Podcast discussion: should they use equity to invest in Townsville, Cairns or Mackay?
Massey’s response: “No, use equity, but use it in the right growing market.” There are two decisions inside that answer. First, should you take on more debt? Second, what should you buy?
Explore more property conversations on TMAP’s YouTube channel.
Property equity is your property’s value minus the debt secured against it. Equity can increase as you reduce the loan or the property rises in value. It can also fall.
Accessing home equity generally involves increasing borrowing against that property. You might use the borrowed funds for an investment property deposit and purchase costs, with another loan funding the balance.
TMAP’s story about Tupou’s second property illustrates that pathway. It is one family’s experience, not evidence that the same approach suits every homeowner.
Usable equity is the portion a lender may let you borrow against, subject to its valuation, lending limits and credit assessment.
Loan-to-value ratio, or LVR, compares the loan with the property’s value. An 80% LVR means borrowing equal to 80% of that value. Here is an illustrative calculation using an 80% borrowing limit:
| Item | Amount |
|---|---|
| Current property value | $800,000 |
| Outstanding mortgage | $400,000 |
| Total equity | $400,000 |
| 80% of property value | $640,000 |
| Potential usable equity before costs and approval | $240,000 |
Calculation: $800,000 × 80% − $400,000 = $240,000.
Drawing the full $240,000 would increase debt secured against the existing property to $640,000. It is borrowed money, with interest and repayments attached. Lender policies, valuations, costs and mortgage insurance requirements can change the amount available. An 80% LVR is an illustration, not a universal entitlement.
No. Equity concerns your security position. Borrowing capacity concerns how much additional debt a lender will approve after assessing your finances.
Serviceability means your assessed ability to meet repayments. Lenders consider income, debts, living expenses and commitments. Expected rent may help, but ask how much the lender will recognise and what allowances apply.
APRA’s May 2026 lending update explains the mortgage serviceability buffer: banks assess repayment capacity above the loan’s interest rate. Your broker should confirm the requirements applying to your application.
Ask: “What can I comfortably hold after normal household spending and a proper buffer?” That question matters just as much as the approval figure.
A market’s previous growth does not establish what your next purchase will return. Assess the opportunity at today’s purchase price.
In the North Queensland podcast exchange, Felise clarifies that the listener is asking about using equity, rather than necessarily committing to those three markets. That clarification separates the funding strategy from the location decision.
Massey supports exploring equity strategically. His concern is how much future opportunity remains after substantial price increases. That is his perspective, not a verified forecast for Townsville, Cairns or Mackay.
TMAP’s related Brisbane and Melbourne podcast article explores the same distinction between past performance and future value. Neither a booming market nor a flat one removes the need for property-level research.
A suitable investment needs to fit your budget and goals, with evidence supporting tenant demand and realistic ownership costs.
ASIC Moneysmart’s property guide details purchase costs, ongoing expenses and vacancy risks. Check insurance quotes, building condition, strata records and relevant flood or other hazard information before committing.
Your investment cash-flow calculation must include the equity-release debt as well as the loan against the new property.
Consider a hypothetical $500,000 purchase. You borrow $100,000 against your home for the deposit and $400,000 against the investment. Purchase costs are funded separately from savings in this example.
Your original home-loan repayments continue too. These are assumptions, not loan quotes or a recommendation for interest-only borrowing. Principal-and-interest repayments would be higher at the same rate; interest-only periods also end.
That is the practical follow-through from the podcast’s two-decision lesson: a deposit strategy still needs an affordable holding strategy.
Additional borrowing increases your exposure to losses and ongoing repayment obligations. Moneysmart’s borrowing-to-invest guidance warns that using your home as security can put it at risk if you cannot repay.
Run this risk checklist:
Cash reserves provide flexibility. Further equity is not a guaranteed emergency fund because accessing it requires lender approval.
Ask your broker to explain both the loan accounts and which properties secure each borrowing. A separate investment-purpose split can help keep records clear, but does not by itself separate loan security.
Cross-collateralisation means multiple properties secure a loan or lending arrangement. It can complicate selling or refinancing. Ask about alternatives, costs and release conditions. Even without cross-collateralisation, your home remains exposed if it secures the deposit borrowing.
The ATO’s interest-expense guidance explains that the use of borrowed funds matters for deductibility. Securing a loan against your home does not automatically make its interest deductible or non-deductible.
Keep investment and private spending separate, preserve the transaction trail and seek qualified tax advice before moving money. A loan split alone does not guarantee a deduction.
Waiting can be appropriate when the additional debt would leave your household financially fragile.
Pause if your income is uncertain, current repayments already stretch you, emergency savings are inadequate or the investment only works with rapid growth. You can review your position without committing to borrow.
Massey’s enthusiasm for exploring equity should prompt investigation, not pressure. Return to the listener’s original dilemma: having equity creates an option. You still need a sound reason to exercise it.
Yes, subject to lender approval. You borrow against available equity and use those funds towards the deposit. The lender must still assess security and repayment capacity. Allow for purchase costs and a buffer, and remember that the borrowed deposit creates repayments alongside the new property loan.
Sometimes. Your existing lender may offer a loan increase or separate split, subject to assessment. Refinancing to another lender is another option. Compare total costs, features, remaining loan term and security arrangements rather than assuming a full refinance is necessary or automatically worthwhile.
Saving can reduce the additional borrowing required, while an equity-funded deposit may allow an earlier purchase if approved. Compare the total debt, repayments, cash reserves and investment risks under each approach. Keeping some savings accessible may matter more than bringing a purchase forward.
Your debt does not reduce just because property values fall. Your LVR increases, which can limit refinancing or further borrowing. Selling may leave less equity than expected, or a shortfall after costs. Test your ability to hold through weaker conditions before releasing equity.
First, establish whether extra borrowing suits your household. Then assess the specific investment independently.
Take these questions to a qualified mortgage broker:
For help exploring your property goals, contact the TMAP team. Have a qualified mortgage broker assess the credit options before making a commitment.
Continue the conversation with Massey and Felise through TMAP’s YouTube channel. Use the education to improve your questions, then make the decision using your own numbers.
General education only, not personal financial, credit, tax or legal advice. Examples are illustrative. Podcast discussion and quotation supplied in the episode brief. Supporting guidance accessed 28 October 2026.