What is equity?
Equity is the value of your home you own outright. It’s calculated by subtracting what you owe on your mortgage from your property’s current market value.
For example:
If your home is worth $700,000 and your mortgage balance is $200,000, your equity is $500,000.
Why equity matters
Over time, most properties in Australia have increased in value, meaning many homeowners may have more equity than they realise. This could put you in a strong position to leverage that equity and invest in your financial future.
Note: Property investment carries risks, and values can fluctuate.
Rising property values = growing equity
If your home’s value has risen while you’ve been paying down your mortgage, you may have built up enough equity to fund a deposit on an investment property. In many cases, homeowners aim to use their available equity to cover a 20% deposit on the property they want to purchase.
How does it work?
Imagine you bought a home for $500,000 five years ago with a $400,000 mortgage (80% of its value). Today, your home is worth $600,000 and your mortgage balance is $380,000. You now owe just 63% of its current value.
Your equity has grown because you’ve been reducing your loan while your property value has increased. In this scenario, you could potentially borrow an additional $100,000 (bringing your mortgage back up to 80% of your home’s value) and use that as a deposit for an investment property.
Ready to take the next step?
Whether you're buying your first investment property or restructuring a multi-property portfolio, we're here to help. Reach out to our BankVic Home Loan Mentors to explore how we can help support your journey toward long-term financial wellbeing.
We’re here to help
If you have any questions about how investing in property can support your long-term financial goals, visit bankvic.com.au/home-buying/investor, call 13 63 73 or book an appointment with a Home Loan Mentor by visiting www.bankvic.com.au/book-appointment.
