Investors

Can I use home equity to buy an investment property?

Usable equity can fund the deposit and costs, but it increases debt secured against the home.

Short answer

Yes. Subject to approval, usable equity in your home can fund some or all of an investment-property deposit and purchase costs. The equity is accessed through additional borrowing, not withdrawn as free money. You must qualify for both the equity loan and the investment loan under the lender's serviceability and security rules.

A common two-loan structure

One separate split against the home can fund the deposit and costs, while another loan is secured against the investment property for the remaining price. Keeping purposes separate can improve record keeping and flexibility. Avoid cross-collateralising both properties unless the benefits and future consequences are understood.

Calculate usable equity from the lender's valuation.
Allow for duty, legal and purchase costs.
Keep investment and private spending separate.
Stress-test both loans and property expenses.

Equity does not replace borrowing capacity

A homeowner can have substantial equity and still be unable to service more debt. The lender assesses income, expenses, existing commitments, expected rent and buffered repayments across the complete position.

An example of the funds required

For a $600,000 investment purchase, a 20% deposit is $120,000 before stamp duty and other costs. If the home has enough usable equity, a separate home-secured split might fund that contribution. The investment property loan could fund the remaining $480,000, subject to valuation. The household then owes the full $600,000 plus any borrowed costs, even though the investment loan itself appears to have an 80% LVR. Calculate repayments on the combined new debt.

Why separate securities can help

Using one lender and securing both properties together may appear simple, but it can give the lender control over more security and complicate a future sale or refinance. Separate loans and securities can provide more flexibility, although not every scenario or lender allows the desired structure. Compare rates, fees, servicing and valuation outcomes before deciding. Structure should support the investment plan, not merely make the first approval administratively convenient.

Tax and risk need separate advice

Interest deductibility generally follows the use of borrowed funds. Keep the equity split traceable and transfer funds directly for the investment purpose where practical. Obtain registered tax advice before drawing. Also model vacancy, repairs, rate rises and a fall in property value. Because the home secures the deposit borrowing, problems with the investment can place home equity at risk. Maintain a genuine buffer and avoid relying solely on expected capital growth.

Questions to ask before you proceed

How much verified rent will the lender use and which property expenses are included?
How are my existing investment debts and future principal repayments assessed?
Which parts of the proposed structure need separate registered tax advice?

Key takeaway

Equity can fund the contribution, but assess the combined debt, clean structure and risk to the home before proceeding.

Official guidance: ANZ: Using the equity in your home

This is general information, not personal financial, tax or legal advice. Lending criteria, fees and eligibility vary.

Explore all Learn Hub topics

START A CONVERSATION

Want to discuss your situation?

Give us the starting point. We will use your answers to make the first conversation more useful.