Home Equity Access Scheme: Use Home Equity to Invest Smarter

Date Published: 15th Aug 2025

Understanding Home Equity and How Equity Loans Work

You’ve been paying your mortgage for years. You’ve chipped away at the loan. You might’ve even done a few renos. Now, there’s value sitting quietly in your property.
But what if I told you that money — your equity — could be doing more than just sitting there?
Let’s unpack how home equity works, how to use the equity in your home, and how equity loans could fund your investment property.

What Is Home Equity and Why It Matters

Home equity is the difference between what your home is worth (its market value) and what you still owe on your home loan.
Simple example:

Your current home is worth $800,000
You owe $500,000
You have $300,000 in equity

But not all equity is usable. That’s where things get strategic.

How to Build Equity in Your Home Faster

To build equity quicker:

Make extra repayments
Increase your property’s value with home improvements
Focus on principal and interest repayments, not just interest-only

Some people also pay down their home loan aggressively in the first few years to build up some equity quickly.

Calculating the Total Equity in Your Property

Here’s how to calculate it:

Find the market value of your home
Subtract your loan balance

That gives you total equity.
Then calculate usable equity in your home:

Most lenders allow borrowing up to 80% of the value of your home
Subtract what you still owe

That’s the money you can potentially use — wisely.

Illustration showing how equity grows through loan repayments, home improvements, property market growth, and extra payments with icons like piggy bank and calculator

How Home Equity Works When Buying an Investment Property

How to Use the Equity in Your Property to Purchase a Second Home

You can use the equity as a deposit or full funding for a second home or an investment property.
In fact, many investors use equity to buy — not save — their next property.
That’s the power of leverage.

What Is Usable Equity and How to Calculate It

Say your value of your property is $700,000.
80% of that is $560,000.
If your outstanding loan is $400,000, your usable equity is $160,000.
That’s how much you can borrow against your equity.

Why Loan Payments Matter for Equity Growth

Every dollar you put into loan repayments builds equity. But there’s more.
Smarter loan structures can:

Reduce the life of the loan
Lower risk
Help avoid overleveraging

Make sure your repayment plan fits your goals.

Use the Equity in Your Home with Confidence

When to Use Equity Instead of Saving for a Deposit

We often meet investors who wait years to save 20% to avoid lenders mortgage insurance.
But in many cases, paying a little mortgage insurance upfront helps you:

Buy sooner
Catch market growth
Lock in a better loan amount

The risk? Waiting too long and missing the upside.

How to Use Home Equity Loans or a Line of Credit Wisely

There are two main ways:

A home equity loan: you receive a lump sum
A line of credit: draw what you need, when needed

Both should come with buffers and solid advice. Never overextend.
A variable rate home loan or fixed rate loans may also impact your strategy, so compare them carefully.

What Home Loan Specialists Can Do for Your Equity Strategy

This is where home loan experts shine.
They help:

Evaluate your existing loan
Explore whether you may be able to use more equity
Stress test scenarios
Create a lower interest rate strategy

Always work with someone who holds an Australian Credit Licence.

Chart showing usable equity calculation: Property Value $700K, 80% LVR = $560K, Loan Balance $400K, resulting in $160K usable equity

Navigating the Home Equity Access Scheme

Understanding the Home Equity Access Scheme and Eligibility

The Home Equity Access Scheme helps eligible homeowners get government-backed advances using their home as security.
You must:

Be over a certain age or on a pension
Own a property in Australia
Understand the costs (compound interest applies)

This can allow you to access cash flow without selling your home.

How Much Equity Can You Access Safely

Avoid the trap of borrowing too much.
Stick to:

80% loan-to-value ratio
Keeping buffers
Reviewing potential market changes

This helps keep your equity available without risking your assets.

Why Security for the Loan Matters When Using Your Home

Using your home as security means your property could be at risk if things go wrong.
Always assess:

Income reliability
Rate rises
Exit strategy

Again, partner with a lender or broker with an Australian Credit Licence.

Avoiding Common Equity Mistakes That Derail Growth

Let’s be honest — waiting too long or rushing in can both cost you.
Common mistakes include:

Tying multiple properties together (cross-collateralisation)
Borrowing too close to the maximum limit
Ignoring repayment buffers
Fearing mortgage insurance and delaying action

Sometimes it’s smarter to pay lenders mortgage insurance than to miss $70K in capital gains.

Why Cross-Collateralisation Can Be Risky

It’s tempting, but it ties your properties together. If one struggles, both are impacted.
Keep loans separate. Stay flexible. It makes refinancing or selling easier down the track.

Why Waiting Costs More Than Paying LMI

A real client story: Paid $10K in lenders mortgage insurance and gained $90K in property value in under 18 months.
That’s a smart return.
Delaying might save LMI, but could cost equity to fund future growth.
💡 Want to understand this more deeply?
👉 Watch: How Idle Equity Is Losing You $70K+ in Growth (Don't Miss Out)

How to Make Equity Work Without Stress

Keep it simple:

Leave a buffer
Set investment goals
Choose properties with yield, growth, and low vacancy
Don't get emotional

Make your equity work — without the burnout.

Step-by-Step: Using Your Home Equity for Investment Property Growth

Get a Property Valuation and Review Your Home Loan

Step 1: Know your numbers.
Step 2: Update your current home loan
Step 3: Work out how much equity you may access
Then speak to an advisor about structures.

Choose the Right Loan and Avoid Overleveraging

Choose between:

A home equity loan
A line of credit
Or both — depending on flexibility

Make sure it fits with:

Your interest-only loans preference
Whether you need cash up front
Repayment strategy

Match Your Investment Property Strategy to Financial Goals

If you want:

Growth → Buy in emerging suburbs
Income → Prioritise rental yield
Tax strategy → Learn about negative gearing

Your equity can be used in multiple ways, but it needs a plan.

Building Long-Term Wealth Using Your Home

How to Build Equity in Your Home Through Smart Renovations

The fastest way to grow the amount of equity?
Renovate with strategy.
Focus on:

Cosmetic value boosts
Demand-based upgrades
Increasing the market value without overcapitalising

These moves make your equity to invest in property grow faster.

Invest in Property Without Sacrificing Lifestyle or Stability

Don’t overcomplicate it.
Set a budget that allows comfort.
Structure your loan repayments to balance lifestyle.
Think long-term, not short-term flips.
You’ve already built up equity. Now let it support your lifestyle, not hinder it.

Why Using Your Home Should Be a Strategic Wealth Decision

Using your home is the difference between stagnation and wealth growth — if done wisely.
Ask:

How can I leverage the equity I have?
How do I use my first home to fund the next?
What structures protect me if things shift?

The answers are inside your numbers — and your support team.

Ready to Make Your Equity Work?

Your home equity is the difference between stagnation and growth. Whether it’s your first home or your fifth, it’s time to stop sitting on unused capital.
📺 Still unsure?
👉 Watch: How Idle Equity Is Losing You $70K+ in Growth (Don't Miss Out)
If you're ready to take action, speak to one of our home loan experts today and unlock your next move.

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Rasti Vaibhav,
The Architect of Property Wealth

Disclaimer: This article provides general information only. It does not consider your personal objectives, financial situation, or needs. Always consult a licensed financial adviser or tax professional before making financial decisions.