Using Equity to Buy Another Property: A Step-by-Step Guide

If you already own a home or investment property, you might be sitting on a powerful tool for building your wealth — equity.

Equity is simply the difference between what your property is worth and what you still owe on your loan. The more equity you have, the more options you open up for purchasing another property — without having to save a massive cash deposit.

Here’s how the process works:

Step 1: Work Out Your Current Equity

Start by finding out the current market value of your property. Then subtract the remaining loan amount.
Example: If your property is worth $800,000 and your loan balance is $400,000, your equity is $400,000.

Step 2: Find Out How Much You Can Use

Banks usually let you borrow up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI).
Using the same example:

• 80% of $800,000 = $640,000
• Subtract your loan balance ($400,000)
• Usable equity = $240,000

Step 3: Get Your Borrowing Power Checked

Even if you have equity, your income and expenses will affect how much you can borrow. This is where I run the numbers to see exactly what’s possible before you start searching for properties.

Step 4: Decide on Your Investment Strategy

Is your goal capital growth, rental yield, or a mix of both? The right property depends on your long-term goals. I’ll guide you on locations, property types, and how to structure the loan and strategy to keep you in control of your cash flow.

Step 5: Secure Pre-Approval

With the right lender and loan structure, you can have your finance ready so you can act fast when you find the right property.

Step 6: Purchase and Settle

Once you’ve found your property, we’ll finalise the loan, pay the deposit (from your equity release), sign contracts, and arrange for settlement.

💬 Tip: Using equity can be a smart move, but it’s important to borrow responsibly and plan ahead so your portfolio grows without overextending yourself.

If you’d like to see how much equity you could unlock. As a Buyers Agent and Mortgage Broker, I can run the numbers for you and map out a clear plan.

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