Accessing Equity Explained
How can I access the equity in my home, and what can I use it for?
By Andrew, franklenn FINANCE 7 min readUpdated 3 November 2026
The short answer
You access equity by increasing your home loan, or adding a separate loan split, secured against your property, either with your current lender or by refinancing to a new one. Lenders usually allow you to borrow up to 80% of the property's value without LMI, minus your current loan, and you need to show you can afford the higher repayments. People commonly use equity for renovations, investment property deposits or other investments. It's still debt, so it pays to use it for things that build value.
Detailed explanation
How lenders work out what you can access
The lender starts with its own valuation of your property, multiplies it by the maximum LVR it's comfortable with, often 80% to avoid LMI, and subtracts your current loan. That's your usable equity. Then comes serviceability: can you afford repayments on the higher total loan at the lender's assessment rate?
Lenders also ask what the money is for. Renovations, investment purchases and debt consolidation are common and generally accepted. Larger amounts for unspecified purposes may need more explanation, and some lenders cap them.
Your income needs to support the whole new loan, not just the extra amount. If your circumstances have changed since you first borrowed, for example you've gone part-time or become self-employed, the amount you can access may be lower than the equity alone suggests.
Ways to draw on equity
There are a few ways to set it up, and each suits different needs.
If you're renovating, ask whether the lender can release the funds in stages or whether you'll receive them as a lump sum. For larger building projects, a construction loan that pays in progress stages may suit better and can reduce the interest you pay while the work is under way.
- Loan increase or top-up: your existing loan is increased by the amount you need.
- Separate split: a new loan portion for the equity, which keeps its purpose clear and is often our preference.
- Line of credit: a revolving limit you draw on as needed, which offers flexibility but needs discipline and may carry a higher rate.
- Refinance with cash out: moving to a new lender and releasing equity at the same time.
Keep the purpose clean
If you're using equity for investment, such as a deposit on an investment property or buying shares, keep it in its own split and use it only for that purpose. The interest on borrowings used to produce income is generally tax deductible, but mixing personal and investment use in one loan makes it hard to apportion. Your accountant can confirm what applies to you.
For renovations on your own home, a separate split is still useful, because it makes it easier to see the cost of the project and repay it on its own timetable.
Splits also make life easier later. If you sell an investment, refinance or want to pay down a particular debt faster, having each purpose in its own split keeps the numbers simple and avoids untangling a single mixed balance.
Things to think about first
Accessing equity increases your debt and your repayments. Before you do it, check how the new repayment fits your budget, consider leaving a buffer rather than borrowing the maximum, and think about how long you'll take to repay it. If you're using equity to invest, make sure the investment is well researched and suits your plans.
Refinancing to access equity also gives you a chance to review your rate and loan features at the same time, which can offset some of the extra cost.
For renovations, it's worth getting quotes before you apply so you borrow the right amount, with a contingency for the surprises that almost every renovation brings. Asking for more later means another application, valuation and possibly fees.
Worked example
Accessing $85,000 for a renovation
An illustrative example. A family's home is valued by the lender at $1,045,000 and they owe $486,700. They want $85,000 for a kitchen and bathroom renovation, set up as a separate split at 6.19% p.a. over 30 years, principal and interest.
| Lender valuation | $1,045,000 |
| Current loan | $486,700 |
| Current LVR | 46.6% |
| Usable equity (80% of $1,045,000 less $486,700) | $349,300 |
| Amount accessed for renovation | $85,000 |
| New total loan | $571,700 |
| LVR after accessing equity | 54.7% |
| Extra monthly repayment on the $85,000 split | $520.05 |
The family uses $85,000 of their $349,300 usable equity, leaving $264,300 untouched, and adds about $520 a month to their repayments, subject to the lender confirming serviceability. Paying the split off faster than 30 years would reduce the interest cost. Figures are illustrative only.
Illustrative only. Figures are examples, not a quote or a recommendation.
Common mistakes
- Relying on an online estimate rather than a lender valuation.
- Borrowing the maximum available instead of what you need plus a sensible buffer.
- Mixing personal and investment purposes in one loan split.
- Using equity for short-term spending and repaying it over 30 years.
- Not reviewing the rate and features while restructuring the loan.
Frequently asked questions
Next steps
Talk to franklenn FINANCE
If you're thinking about using your equity for a renovation, investment or another goal, book a free discovery call with franklenn FINANCE and we'll work out what's available and how to set it up well.
This guide is general information only and does not consider your objectives, financial situation or needs. It is not financial, tax or legal advice. Lender policies, rates and government schemes change. Please speak with us, and with your accountant or solicitor where relevant, before acting.