How to Unlock Equity from Your Investment Property in Australia to Grow Your Portfolio

James Williams
Aug 14
3 min read

The value of the property increases each year — **How to Unlock Equity from Your Investment Property in Australia to Grow Your Portfolio**

For seasoned Australian property investors, the equity tied up in your portfolio can be one of your most powerful tools. By unlocking that equity, you can buy another property, renovate to boost value, or fund other investments — all without dipping into your savings.

However, releasing equity in Australia isn’t as simple as asking your bank for more money. The right approach can help you maximise borrowing power, avoid unnecessary costs, and keep your investment strategy on track.

Here’s what experienced investors should know before taking the next step.

1. Understand How Equity Works in Australia

Equity is the difference between your property’s current market value (based on a professional valuation) and the remaining balance on your loan.

Example:

Market value: $800,000
Loan balance: $500,000
Equity: $300,000

In Australia, most lenders will allow you to borrow up to 80% of the property’s value without paying Lenders Mortgage Insurance (LMI). That means in this example, you could potentially unlock $140,000 ($640,000 – $500,000) without extra insurance costs.

Some lenders will allow you to go above 80% LVR, but this will trigger LMI — which can run into the thousands — so it’s usually avoided unless there’s a strong investment case.

2. Clarify Your Purpose Before Applying

Your lender will want to know why you’re releasing equity, and in Australia, common uses for investors include:

Buying another investment property to expand your portfolio
Renovating to increase property value and rental income
Consolidating high-interest debts into your mortgage
Funding other investments like shares, business ventures, or developments

Being clear on your purpose helps you choose the most suitable loan product and structure for the Australian lending environment.

3. Know Your Equity Release Options

In the Australian market, equity can be accessed in several ways:

Loan top-up – Increase your existing home loan balance with your current lender. Quick, but limits you to their rates and policies.
Separate investment loan – Keeps your property finances separate, ideal for tax and cash flow tracking.
Line of credit (LOC) – Flexible access to funds when you need them, popular with renovators or investors making staged purchases.

A good mortgage broker can compare 45+ Australian lenders to find the structure that works best for your investment plan.

4. Check Your Loan-to-Value Ratio (LVR)

In Australia, LVR plays a critical role in equity release:

LVR = (Loan amount ÷ Property value) × 100
A lower LVR generally means more lender options and sharper interest rates.
If your LVR is too high, you may need to increase your property value through renovations or reduce your loan balance before accessing equity.

5. Factor in Risks and Buffers

Unlocking equity increases your overall debt — and Australian lenders will stress-test your repayments at higher interest rates than you’re currently paying. Always:

Keep a buffer for unexpected vacancies, rate rises, or repair costs.
Avoid over-leveraging, as APRA’s lending rules can limit your borrowing capacity if you carry too much debt.
Structure loans for flexibility so you can switch between interest-only and principal & interest repayments if needed.

6. Work With an Investment-Savvy Broker

Not all brokers specialise in investment property finance. A broker who understands the Australian market can:

Check your equity position with a free assessment
Compare equity release products from over 45 lenders
Advise on tax-efficient loan structures in consultation with your accountant
Navigate each lender’s policies and serviceability calculators

The Bottom Line

For Australian property investors, unlocking equity can open the door to faster portfolio growth, higher returns, and new opportunities. Done strategically, it’s one of the most cost-effective ways to fund your next move — whether that’s purchasing another property, renovating, or diversifying your investments.

If it’s been more than 12–18 months since your last loan review, it’s worth checking your current property values and LVR to see what’s possible.

Ready to access your equity? We offer: