Using Equity to Buy Property: The Smart Way to Grow Your Portfolio

If you’re thinking about buying an investment property or upgrading your home, you may not need to save a fresh deposit. In fact, the value already sitting in your current property might be enough to get you into your next one sooner. 

Using equity to buy property is one of the most common and one of the most powerful strategies for Australians looking to grow their wealth, build passive income, or accelerate their financial goals.

The trick is understanding how equity works, how much of it you can actually access, and how to structure everything so your future doesn’t get tangled in unnecessary bank red tape. 

Here’s the expanded, Sando Finance guide—clear, strategic, and designed to help you act with confidence.

Understanding Home Equity.

Let’s start with the basics. 

Home equity is the portion of your property that you truly own—not the bank. It’s calculated as the difference between your home’s current market value and the remaining balance on your home loan.

For example:

• Property value: $1,000,000
• Home loan balance: $650,000
• Your equity: $350,000

That $350,000 represents your ownership stake in the property. As you make repayments—or as the market value increases—your equity naturally grows over time.

But here’s the key detail most people miss: You can’t automatically access all of your equity.

Lenders usually allow you to draw on only a portion of it, known as usable equity, and that’s what matters when you’re looking to buy another property.

How Usable Equity Is Calculated

Most lenders cap borrowings at 80% of your home’s value before they charge Lenders Mortgage Insurance (LMI). That means the equity you can actually unlock is usually less than the total equity you hold.

Here’s how to calculate usable equity:

Find 80% of your property’s current value
$1,000,000 × 80% = $800,000

Subtract your remaining home loan balance
$800,000 – $650,000 = $150,000 usable equity

This $150,000 becomes the amount you can potentially use as a deposit, plus it may help cover upfront costs like stamp duty, conveyancing, and settlement fees.

If your target property requires a larger deposit, you may need to contribute savings as well—but your equity is doing the heavy lifting.

The Key Benefits of Using Equity to Buy Property

1. You use existing value, not fresh savings: Instead of spending years building a cash deposit, you leverage the wealth you’ve already created.
2. You avoid LMI by keeping your LVR under 80%: This can save thousands upfront.
3. You grow your property portfolio faster: Equity lets you take advantage of opportunities sooner.
4. You build wealth using leverage: This is how many Australian investors scale from one property to several.

The Hidden Catch: Cross-Collateralisation

When using equity to buy property, most borrowers aren’t warned about cross-collateralisation—a lending structure where both properties are tied together as security.

This can mean:

1. You lose flexibility when refinancing
2. You may need lender approval to sell one property
3. The bank may use sale proceeds to reduce other loans
4. You become heavily reliant on a single lender’s policies
   

These structures often benefit the bank more than the borrower.

Risks to Consider (And How We Protect You From Them)

1. Market shifts: A drop in property value can affect your usable equity. We run forecasting scenarios so you’re not caught by surprise.
2. Increased debt levels: A second property means increased repayments. We calculate your repayment buffers and potential rental income before you take action.
3. Unexpected expenses: Vacancy periods, repairs, and rate rises are all manageable with strategic planning.
4. Poor loan structure: A poorly structured equity loan can cost you money and flexibility for years. Our role is to structure your loans for maximum long-term benefit.

Using equity isn’t risky. Using equity without strategy is.”

Why Choose Sando Finance for Your Equity Plan

Banks offer products. We offer strategy.

When you work with us, you get:

• A detailed equity assessment
• Valuation strategies to maximise your usable equity
• Clean, non-restrictive loan structures
• Access to lenders other brokers ignore
• Clear, honest explanations with no jargon

A personalised plan to help you grow your property wealth

You get clarity, confidence and control—without getting buried in forms or stuck in bank logic.

Ready to Unlock Your Equity With Confidence?

Your equity could be the key to your next home, your next investment, or your next step toward financial freedom. Most people underestimate what they can do until they see the numbers.

Book an obligation-free equity review meeting today.

We’ll show you exactly how much usable equity you have, what it can do for you, and the smartest way to structure your next move.

Your dream finance isn’t luck.

It’s built—and we’re here to help you build it.