If you’ve owned your home for several years, chances are you’ve built up equity — and that equity could be the key to funding your next property investment. Instead of saving a new deposit from scratch, many buyers across Melbourne, including areas like Point Cook, Tarneit, and Southbank, use the equity in their home to enter the market sooner. Here’s how it works:
1. Estimate your property’s current value
Start by finding out how much your property is worth today. This can be done through comparable recent sales, a professional valuation, or a free property report from Ace Loans, your trusted mortgage broker in Melbourne. Understanding your market value is the first step in calculating your usable equity.
2. Work out your accessible equity
Your equity is the difference between your home’s current value and the balance remaining on your mortgage. Lenders generally allow you to access up to 80% of your home’s value, minus your current loan — known as your accessible equity. Borrowing above this amount may trigger Lender’s Mortgage Insurance (LMI), even if you’ve paid it previously.
3. Assess your borrowing capacity
Accessible equity helps, but you’ll still need to demonstrate that you can comfortably manage the repayments on a larger loan. Ace Loans, as an experienced Melbourne mortgage broker, can help you review your income, expenses, and current loans to determine your borrowing power. This step is essential whether you’re a seasoned investor or a first home buyer planning your next property purchase.
4. Review your loan options and consider refinancing
This is the ideal time to explore your loan options. You may need to refinance your home loan or take out a new investment loan. Investment loans typically have slightly higher interest rates, though the interest (and some property-related expenses) may be tax-deductible.
Ace Loans can compare products, interest rates, and features to help you choose the right structure for your investment strategy.
5. Apply and settle on your investment property
After choosing a loan product and finding the right investment property, Ace Loans will manage the application and settlement process from start to finish. From documentation to lender requirements, we guide you every step of the way so you can focus on finding a strong investment opportunity in Point Cook, Tarneit, Southbank, or anywhere across Melbourne.