12 May 2026 – 5 minute read

Property prices have increased in many areas. But could they be using the increase as part of a new investment strategy?

If your home has increased in value, you may be asking yourself how to buy an investment property with equity you've accrued. That's not quite how it works, but you may be able to use some of the equity in your home to help buy an investment property. Here's a guide to what equity is, how to calculate equity (and usable equity), the ways you could access your equity, and some of the things to consider before you go ahead.

Key take-outs

• The equity in your home is its current value minus the balance left on your mortgage
• Lenders typically lend up to 80% of an equity amount for the purpose of buying an investment property (which is known as usable equity)
• You may have a choice of ways to borrow against your equity
• Your lender – such as Westpac – can guide you through the options.

Questions answered

• What is equity and how do you calculate it?
• What is usable equity?
• How does investing in property using equity work?
• How much can I spend on an investment property?
• What should I consider before using equity to buy an investment property?
• What are some tips for investing in property?

What is equity and how do you calculate equity?

The equity in your home is estimated by subtracting your current home loan balance from what your property is currently worth.

Value - Outstanding Loan Balance = Equity

Let's say your home is valued at $800,000 and you have $450,000 left on your mortgage. That gives you equity of $350,000.

Equity can build up over time as you reduce your loan amount with principal and interest repayments, and if the market value of the property increases (although it may also decrease in line with market fluctuations). However, when applying for a loan for an investment property, it's the 'usable' equity that matters.

What is usable equity?

Usable equity is the amount of equity in your property that you can access and borrow against, and it's generally up to 80% of the equity you've calculated above.

Your lender or mortgage broker may require a formal bank valuation to determine the current value of your home and to calculate the usable equity you have available.

Get an estimate of your usable home equity using this Westpac calculator.

How does investing in property using equity work?

There are several ways to borrow against the equity in your home to buy an investment property. The options available to you will depend on a number of factors, which your lender – such as Westpac – can talk you through.

Home loan top up

A common way to borrow against equity is by applying to increase your existing loan. This will give you the funds for a cash deposit on an investment property, but you'll need to be in a position to devote more money to repayments.

Use the Westpac Mortgage Repayment Calculator to estimate what this approach will cost and what happens if interest rates rise.

Supplementary loan account

Another option is to set up a new, separate loan account. This may allow you to choose different features from those on your current home loan, such as a fixed rate rather than variable rate loan, a new repayment frequency, or a different term length.

Cross-collateralisation

Cross-collateralisation involves using the existing property as collateral and adding it to the new investment property loan to help with the purchase. In this case, you would end up with two loans – the original mortgage secured by your existing property plus a new mortgage secured by both your existing property and your investment property.

This approach may give you less flexibility than other ways of using equity, as having both securities tied up in one loan could mean more work to separate them down the track if you need to.

How much can I spend on an investment property?

If you're considering a home loan for an investment property, use our repayment calculator to estimate your repayments and our affordability calculator to see what you could afford to borrow.

What should I consider before using equity to buy an investment property?

While leveraging the equity in your current home to invest in a second property may sound like a good idea, there are several factors to think about before diving in.

Can you afford it?

Make sure you can manage the extra repayments and costs that come with an investment property, especially if your property is negatively geared. Think about your cash flow and ensure you'll be able to stay on top of things with your new repayments. You may find yourself managing different loans with different repayment amounts, schedules and loan terms.

Does it match your investment strategy and financial goals?

Long-term property investment may be a more reliable strategy when compared with short-term investment – which can be risky. You may want to avoid a situation where the property you've purchased is overvalued and you're left with negative equity.

Do you know the risks and costs?

Remember that every method of using equity to purchase an investment property comes with a risk, because a default on any of your loans could mean the loss of multiple assets. Plus, there may also be tax implications to consider.

Before making the decision to access your usable equity to buy property, it's a good idea to weigh up all the options, consider taking professional advice, and decide what's best for you and your financial situation.

What are some tips for investing in property?

When looking to expand your property portfolio, it's important to have a carefully considered investment strategy and make decisions based on what will best suit your needs.

Here are some things to consider:

• Research the local market and understand aspects such as rental demand and trends in house prices.
• Map out and manage your cash flow by estimating your potential rental income and ongoing costs on a monthly basis, including strata, council fees, maintenance and loan repayments.
• When crunching the numbers, consider your financial position and current financial commitments, including other loans - plus upfront costs such as stamp duty and conveyancing.
• Look for areas with continued capital growth and while it’s very hard to predict, avoid buying at the top of the market.
• Check the age and condition of the property and any facilities.
• Think about the property maintenance requirements and costs.
• Picture yourself as a tenant and think about what renters are looking for in the market.
• Consider the type of property and its relative risk as an investment (such as established house versus off-the-plan apartment).