The most common way Australians buy their first investment property isn’t years of extra saving, it’s equity. If your home has grown in value, that growth can fund the deposit and costs on the next property, without selling anything or emptying your offset.
Step 1: work out your usable equity
Usable equity is (property value × 80%) minus your current loan. A $1.2m home with a $650,000 loan holds $310,000 of usable equity, enough for a 20%-plus-costs deposit on a property around $1m, or two smaller ones.
Step 2: release it as a separate split
The clean structure is a new loan split against your home for the deposit and costs, plus a standard investment loan against the new property. Two clear loans, two clear purposes. Never blend investment borrowing into your owner-occupier loan, it muddies tax deductibility permanently. Avoid cross-collateralisation (one loan secured by both properties) unless there’s a specific reason; it hands the bank control you may want later.
Step 3: check the servicing, not just the deposit
Equity solves the deposit; income must still service both loans. Lenders count expected rent (usually shaded to 75–90%) and, at some lenders, negative gearing benefits. Serviceability differs wildly between lenders for investors, the same file can support one more property at lender A and zero at lender B.
- Rental income treatment: 75% at conservative lenders, 90%+ at investor-friendly ones.
- Existing debt assessment: some lenders assess your other loans at their actual rate, others add the full 3% buffer, a huge difference across a portfolio.
- Interest-only preferences: see when interest-only makes sense.
Estimate your borrowing power with both loans in the picture.
Open the borrowing capacity calculator →The risks, stated plainly
You’re gearing the family home to buy a second asset: if the investment underperforms and rates rise, both loans still need paying. Buffers matter, most seasoned investors keep 6–12 months of repayments in offset before expanding. See our investment lending service or have Nathan map your equity position.