1 July 2026 - 6 min read

For homeowners, it’s always reassuring if your property grows in value over the years. Yet at first glance, this growth provides no immediate benefits – it just feels good. One way to tap into the value of your home is with an equity release, which could free up funds for any number of purposes.

In this article, we cover some of the reasons you might want to access funds, help you calculate how much equity you have in your home, and describe some of the ways to unlock your home equity. We also explore the key considerations when planning to release equity and touch on potential risks.

As with all things financial, it’s important to understand all the pros and cons before moving forwards. At Westpac, we can chat through some of the refinancing options available to you. But it’s also a good idea to seek independent professional advice from a qualified financial advisor.

Key take-outs

• Equity release lets you tap into the increased value of your property
• Your equity is your property's current value minus your outstanding loan amount
• Lenders will generally consider offering loans of up to 80% of your equity
• Refinancing an existing loan can be used for equity release, though other options are available.

Why might I be interested in home equity release?

Equity release could help you get a loan for all sorts of things. One of its key advantages is that you'll generally be paying lower interest rates when compared to personal loans or credit cards, as the borrowing is secured against your property.

Using the equity in your home through 'cash out refinancing' could be used to fund:

• home renovations
• a new kitchen or bathroom
• a solar system
• a pool
• a new car
• education
• major life costs such as medical expenses
• the trip of a lifetime
• debt consolidation.

Many home modifications and home improvements could increase your equity by having a positive impact on the future value of your property.

Alternatively, you may want to access your equity to make an advance payment deposit on an investment property. Building an investment property portfolio could help you accumulate wealth as your property grows in value – and provide you with a rental income stream at the same time.

What is your home equity?

Equity is the difference between the current market value of your property and the amount remaining on your existing mortgage. As you pay off your home loan, the equity you have in your home grows, and if the property's value increases, your equity will go up too.

Let's say your home is currently valued at $1.2 million and you have $550,000 left on your mortgage. That gives you equity of $650,000.

Equity in your property = Value – Loan balance

You can get an estimate of the value of your home using the Westpac property market research tool. Even if you're not ready to consider a release yet, this tool helps you to monitor equity increases over time.

How much equity can I borrow against?

Once you've established your equity, you'll need to work out how much of it you can use if your lender approves – which is known as 'usable equity'. This is the amount of equity in your property you could access and borrow against with refinancing or a new mortgage – and it's typically up to 80% of the equity you've calculated above. So, in general:

Usable Equity = Property value x 80%

You can estimate the maximum equity release available to you using our home equity calculator.

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.

Understanding your usable equity will give you a clearer picture of the funds you might be able to receive through a loan increase or supplementary loan.

How could I refinance my home loan to release equity?

Once you understand the property value and your potential usable equity, you're ready to assess your options. While seeking to access funds through an equity release, you might want to check if the terms of your current home loan – such as the type of loan and interest rate – still suit your needs and goals.

If they don't, you might consider refinancing your home loan, which could involve moving your loan to another lender to potentially get a better rate and features. But before you spend time looking around to compare lenders, it's worth chatting to your current lender's retention team to see if they can help by improving your loan terms.

You might also check whether your home loan has a redraw facility, which allows you to redraw any extra home loan repayments you make; or if you can link an offset account to your home loan. These features could help you reduce the principal on your home loan faster, which may have positive effects on your equity over time.

What about the risk of going into negative equity?

Equity works both ways, meaning that if you access equity in your home and its market value falls later on, you may risk going into negative equity. This happens if the property value sinks below the outstanding balance of your home loan.

However, you can take steps that may provide an element of negative equity protection, such as:

• Boost your regular repayments: By increasing what you repay each month, you could increase your equity, reducing the impact of any market fluctuations.
• Make one-off contributions: If you've received a windfall or you just have some extra cash, it could be wise to use some of it to repay a portion of your home loan, which will help boost your equity in the property.

For more on this, check out our guide to negative equity.

It's worth remembering that equity release is not without other risks too, including potential financial stress. Increasing your loan balance will result in higher repayments and it might extend the length of your loan. It’s also important to factor in fees such as refinancing costs, valuation fees, and potential Lender’s Mortgage Insurance if borrowing above certain thresholds.

What other forms of equity release are available?

You may have come across terms such as ‘reverse mortgage’ and 'mortgage reversion'. If you’re a homeowner aged 60 or over, a reverse mortgage is one way you may be able to leverage the equity in your home to access extra cash.

This is not something all lenders offer – Westpac doesn’t for instance – but here are the basics:

• A reverse mortgage allows you to borrow money from your lender using your home equity as security.
• You can stay in your home and won’t have to make repayments or pay interest to your lender as long as you’re living there.
• Once you or your estate sells the property, the reverse mortgage loan will need to be repaid to the lender in full.
• Compounding interest on the loan will accrue over time, and when the time comes to sell, you or your estate will have to repay this interest in addition to the loan balance you borrowed.
• Each year you age, the proportion of your home’s value that you can borrow increases.

Other options for equity release include:

• equity release agreement, where you sell a portion of your home to an investor leaving you living in your home but paying a form of rent for the portion sold, and
• home reversion, where you sell a proportion of the future value of your home while you still live there.

Find out more on the Australian Government Moneysmart website.

Before choosing any route, it's worth remembering that reverse mortgages and other options tap into what is probably your biggest financial asset and potential legacy. They could also affect your eligibility for government benefits such as the Age Pension.

Therefore, you should talk to a suitably qualified financial or tax adviser to fully understand the impact on your specific circumstances – before making an informed decision.

What about the Home Equity Access Scheme?

For some Australians, particularly those who are 'empty nesters', downsizing is a good way to release equity for use in retirement. But another option, should you wish to stay in your current home and not want to take out a home equity loan, is to supplement your retirement income through the Home Equity Access Scheme.

Formerly the Pension Loans Scheme, it's provided by Services Australia and the Department of Veterans' Affairs and lets eligible older Australians get a voluntary non-taxable lump sum or fortnightly loan from the Government.

The loan is secured against an agreed percentage of the value of your home or other real estate, and you must repay it and all costs and accrued interest to the Government. Repayments can be made or stopped at any time and loans have a negative equity guarantee, meaning you won’t repay more than your home is worth.

For more information, visit Services Australia or the Department of Veterans' Affairs.

Take the next step

If you've decided to consider equity release and would like to discuss your refinancing and home loan options, we're happy to help. Find out more by requesting a call back from one of our loan specialists, or call us on 132 558.