Understand your equity before borrowing against it.
Equity is the value of your property less what you owe against it. Accessing some of it usually means increasing your borrowing, so the repayments and purpose matter as much as the property value.
A property value is the start of the discussion, not an approval.
/01Property value
/02Additional borrowing
/03Repayment impact
Make the distinction
Equity you own. Credit a lender may approve.
These are different amounts. A rise in property value does not put spendable money in your account.
/01
My property may be worth more.
Start with the value and debt
Your equity changes with the property value and what you owe. An online estimate or agent’s opinion can differ from the valuation a lender accepts.
/02
I want to use some of that equity.
Additional credit needs assessment
The lender considers its lending limit, existing secured debt, purpose and your ability to repay. The result may be less than the equity you calculate, or no additional borrowing.
/03
I have a goal in mind.
Bring the purpose into the plan
Explain whether the funds are for a purchase, renovation or another purpose. The purpose affects the assessment and may have tax consequences to discuss with a qualified adviser.
Before adding to the loan
More available funds come with more debt.
Check what the extra borrowing would mean for your household now and over the remaining loan term.
Include the extra loan amount, rate, fees and repayment period. Extending the term may reduce the scheduled repayment but increase total interest.
02Your home as security
Borrowing against a home puts that property at risk if repayments cannot be made. Using the funds elsewhere does not remove that risk.
03Valuation and loan limits
The lender determines the valuation it accepts and the lending criteria. Do not treat a percentage of an estimated property value as approved funds.
04Purpose and record keeping
Keep clear records of what borrowed funds are used for. Obtain tax advice before mixing personal and investment purposes; a loan split alone does not determine deductibility.
This guide covers additional home-loan borrowing. It does not describe reverse mortgages, shared-equity arrangements or the government’s Home Equity Access Scheme.
The next steps
Prepare for an equity discussion.
Bring the existing position and the reason for the extra borrowing together before relying on funds for another commitment.
01
Property and current loans
Have the property address, current loan statements and details of debts secured against it. Note any fixed-rate period and existing loan features.
02
Amount and purpose
Outline what you want to do, how much it may cost and when you need the funds. Include quotes or purchase details where available.
03
Income and commitments
Prepare evidence of income, regular expenses and other debts. The lender needs to assess the proposed repayments alongside these commitments.
04
Cost and suitability
Review the valuation, fees, repayment impact and loan conditions with your adviser. Wait for the required lender decision before committing on the assumption funds are available.
A refinance match or indicative equity calculation is not a property valuation, credit approval or a promise of available funds.
A little more clarity
Before you take the next step.
A few useful answers. For the details that are specific to you, talk with our team.
General information only; not personal investment or tax advice. Equity estimates and loan matches are indicative. Additional borrowing is subject to lender eligibility, acceptable purpose, valuation, full assessment, terms, conditions and fees. A home used as security may be at risk if repayments are not made.
