Using Equity to Invest in Property
For many property investors, the first investment property is funded using equity from their existing home.
Rather than saving a full deposit, homeowners can often access the value that has built up in their property to help fund the next purchase.
When structured correctly, using equity can accelerate property investment while maintaining financial flexibility.
This guide explains how equity works, how it can be used for investment, and what Perth homeowners should consider before moving forward.
What Is Equity?
Equity is the difference between your property’s value and the amount remaining on your loan.
For example:
Property value: $850,000
Loan balance: $500,000
Your equity would be approximately $350,000.
However, lenders generally allow borrowing up to 80% of the property value without lenders mortgage insurance.
Using the same example:
80% of $850,000 = $680,000
Existing loan = $500,000
This means $180,000 of usable equity may be available, subject to lender approval and serviceability.
How Equity Is Used for Investment
Equity is typically accessed through a loan split or separate loan facility.
This equity can then be used for:
Investment property deposit
Stamp duty and purchase costs
Renovations
Additional investments
Using equity allows investors to move forward without needing to save the full deposit from cash savings.
If structured correctly, it can also help maintain borrowing capacity for future opportunities.
Why Loan Structure Matters
Many investors focus purely on borrowing capacity or interest rates.
However, loan structure is one of the most important factors when using equity.
Poor structure can lead to:
Cross-collateralisation between properties
Reduced borrowing flexibility
Difficulty accessing equity later
Complications when selling a property
Separating loan splits and structuring the equity release correctly can prevent these issues.
If you want to understand how investment lending works in more detail, you can explore our guide to
→ Investment Property Loans in Perth
Investment Opportunities in Perth
Perth has seen strong interest from investors in recent years due to:
Relative affordability compared to other capital cities
Population growth
Tight rental markets in many suburbs
Many investors choose to use equity to purchase:
Established investment properties
House and land packages
New builds designed for rental yield
Understanding both the property opportunity and the finance structure is key.
Using Equity Before Building
Equity can also be used to fund construction projects.
For example, homeowners may use equity to:
Fund the deposit for a new build
Cover site costs or upgrades
Structure an investment build project
Construction lending works differently from standard mortgages, so it’s important to structure this correctly from the beginning.
You can learn more about this here
→ Construction Loans in Perth
Common Mistakes When Using Equity
Some of the most common issues we see include:
Accessing equity without a clear strategy
Using one lender for all properties unnecessarily
Not separating loan splits properly
Overextending borrowing capacity
Equity should be used strategically rather than simply maximising borrowing.
Is Using Equity Right for You?
Using equity can be a powerful tool for building a property portfolio, but it should always be assessed in the context of:
Borrowing capacity
Risk tolerance
Investment goals
Long-term financial plans
For many Perth homeowners, reviewing their equity position is the first step toward the next property decision.
Final Thoughts
Equity allows homeowners to unlock the value they have already built in their property.
When structured correctly, it can help fund investment purchases, build projects or future property opportunities.
If you’re considering using equity to invest in property, the first step is understanding your current position.
You can start by speaking with Matched Finance about refinancing, equity release and investment lending options.