Short answer: yes, you can use home equity to buy another house, and it's one of the most common ways people buy an investment property. Most lenders will let you borrow up to 80% of your home's value, minus what you still owe, and use that as the deposit and buying costs for the next property. The catch is that you need the income to carry both loans, and your home becomes security for more debt.
Plenty of people in Glenbrook, Springwood and Penrith who bought five or more years ago have more equity than they think. Here's how using it works, with real numbers, and the things we look at before setting it up.
Equity is what your home is worth minus what you owe. The part you can borrow against, your usable equity, is usually worked out like this:
Home value × 80% − what you owe = usable equity
The valuation is the lender's, not the real estate app's, and it's often lower. Lenders can go above 80% with lenders mortgage insurance (LMI), but that adds cost.
Say you use that equity to buy a $750,000 investment property in the Penrith area.
You've bought with no cash of your own, and the 80% limit means no LMI on either property. But your total debt has gone from $450,000 to about $1.23 million. That's the number the lender looks at.
Equity gets you the deposit. Your income decides whether the loan goes ahead. Lenders will look at:
Our borrowing power calculator gives you a rough starting figure.
In Australia, "remortgaging" usually means one of two things:
Either way, keep the equity in its own loan split. The ATO says whether interest is tax deductible depends on what the borrowed money is used for. Money drawn for an investment deposit can be deductible. Mixing it with a holiday or a new car makes it messy. Talk to your accountant before you draw anything.
Some lenders will want to put both properties under one loan with both homes as security (called cross-collateralisation). It's simpler on day one, but it gives that lender more control later. If you sell one property, or want to refinance one, the lender can reassess both.
The usual alternative is to take the equity as a split on your home loan and put the new property's loan on its own. That way each property stands alone. Which one suits you depends on your plans, and it's worth getting right at the start because untangling it later costs time and fees.
Lenders don't generally lend the full price against the investment property on its own. You can still end up borrowing 100% (or more, once costs are in) using one of two options.
That's the worked example above: equity covers the deposit and costs, and a standard 80% loan covers the rest. It's the most common way.
A parent or family member uses their home as extra security for part of your loan. Family guarantees are mostly used for buying a first home to live in. Some lenders will accept them for an investment purchase, many won't, so it's very much lender by lender. Moneysmart's guide to going guarantor is worth reading together: the guarantor can be pursued for the guaranteed amount if repayments stop, and should get independent legal advice. More on our guarantor loans page.
If you're upsizing rather than investing, equity works the same way for the deposit on your next home. The difference is timing. If you buy before you sell, you may need a bridging loan to cover the gap, and it's worth planning for the sale taking longer than expected.
It can be. Moneysmart's guide to borrowing to invest puts the risk plainly: borrowing against your home puts your whole home at risk, and losses are magnified as well as gains. A few things to think about:
If you're weighing up equity for a reno instead, see using equity to renovate.
We're based on Park Street in Glenbrook and work with investors across the Blue Mountains, Penrith and the Hawkesbury. We compare 70+ lenders, check what your home will value at before you start looking, and set up the loans so each property stands on its own. See our investment property loans page. The lender pays us when the loan settles, so there's no broker fee.
Call (02) 4744 2054 or book a free chat.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Consider whether it's appropriate for you and speak to a broker, and your accountant about tax, before acting. Lending criteria, fees and charges apply. Figures are rounded and current as at October 2026. Four Red Hats Pty Ltd (t/a Lend Local Co) ACN 666 330 972 is authorised under LMG Broker Services Pty Ltd, Australian Credit Licence 517192.
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