Smart Ways to Approach Equity Release Without Selling

You can use the equity in your home without selling it. Refinancing is one common way to do it.

If you own a home in Warner, you may have built up more value than you realise. That value can help fund a renovation, a deposit on an investment property or a big life goal. This article walks you through how it works, what it costs and what to weigh up before you decide.

What Is Home Equity and How Can You Access It?

Home equity is the gap between what your home is worth and what you still owe on your loan. You can access equity by borrowing more against your home, usually through a refinance or a separate loan.

Equity grows as you pay down your loan and as your property value changes. A lender orders a property valuation, and that valuation together with the lender's maximum LVR sets the upper limit on the loan. Each lender sets its own limit, so the loan amount available to you can vary.

Your income and expenses matter too. The lender must also assess your ability to repay (serviceability) and apply its credit policy before approving any amount. Having equity does not mean a lender will approve the full amount, because you still need to show you can afford the repayments. Our borrowing capacity page is a good place to get a feel for that side of things.

How Does a Cash Out Refinance Work?

A cash out refinance replaces your current home loan with a new, larger one, and you receive the extra amount as cash. The new loan pays out your old lender, and the difference goes to you.

The process usually runs in a few stages. We talk through your goals first, then compare lenders and check what you could borrow. After that comes your refinance application and a valuation of your home. Once you are approved, the new lender settles with your old one and releases the extra funds.

This is also a chance to review your whole loan. You might look at your interest rate, features like an offset account or redraw, and whether a home loan health check shows you are paying more than you need to. You can read more about our approach on our refinancing page.

Renovation Example: Borrowing $50,000 Against Your Home

Consider a Warner homeowner who wants to add a new deck and update the kitchen. They have built up enough equity and want about $50,000 without selling the home they love.

We look at their current loan and find it is a good time to refinance. The new loan is split in two. The original balance stays in one part, and the extra $50,000 sits in a separate loan with a 25-year term.

As an illustration only, at an example rate of 6.75% p.a., repayments on that extra $50,000 over 25 years would be roughly $345 a month. Splitting the loan means they can see exactly what the renovation costs each month. They can also make extra repayments on that part to clear it sooner.

The trade-off is that borrowing more means paying more interest overall, and a longer term adds to that. Refinancing can also come with discharge or application fees depending on the lender, so these are worth checking first. The homeowner decides the extra repayment fits their budget before going ahead.

Can You Access Equity for Investment?

Yes, many homeowners use equity as a deposit for an investment property, but it increases your debt and ties your home to the outcome. The loan is secured against your home, so the stakes are higher than with a standalone purchase.

Picture a Warner couple who want to buy an investment property. They have no spare savings, but their home has equity. We help them release equity of $80,000 through a refinance, and that amount becomes the deposit and costs for the new purchase.

At the illustrative rate of 6.75% p.a. over 25 years, repayments on that $80,000 would be roughly $553 a month. That is on top of the loan on the new property. Before they proceed, we check their borrowing capacity and talk through how rent, vacancy and rising repayments might affect their cashflow. They decide to go ahead with a buffer in place.

The outcome is that they buy without selling their home, but they carry two loans and the risk that comes with them. Tax treatment depends on how the borrowed funds are used, so speak with your accountant before you commit. Our investment loans page covers this path in more detail.

What Should You Check Before You Release Equity?

Before releasing equity, check your current loan terms, the total cost of switching and how the extra repayments fit your budget. A good plan comes from looking at the full picture, not only the cash you receive.

If you are on a fixed rate, ask whether breaking it early would cost you. Timing a refinance around your fixed rate expiry can sometimes avoid that cost. If your fixed rate period is ending soon, it may make sense to wait and refinance when it does.

Also think about the purpose of the funds. Borrowing for a renovation or an investment is different from borrowing to cover everyday spending, and the repayment period should match the purpose. Looking at your overall home loans setup first helps you choose a structure you are comfortable with for years to come.

Every household is different, and the right answer comes from a conversation about your plans. Call one of our team or book an appointment at a time that works for you. We will go through your options at your pace, so you can make a decision you feel good about.

Frequently Asked Questions