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Equity release

Putting your equity to work.

The equity in your existing property is dead capital until you deliberately put it to work. A clean equity release unlocks the next deposit without touching your savings — and without contaminating your deductibility.

The deductibility test you can't ignore.

When you release equity, the interest on the released portion is deductible only if the money is used for an income-producing purpose. Use it to buy an investment property, and it's deductible. Use it to renovate your own home or pay for a holiday, and it's not. Mix the two in the same loan account, and you've contaminated deductibility — which is painful, messy, and sometimes irrecoverable without a full restructure.

The clean way to handle this is a separate split for the released equity, kept in a distinct loan account, with a clear and documented purpose. The moment funds leave that account they should go directly to the investment purpose. Don't park it in savings in between. Don't use it for personal spend with the intention of 'topping up' later. Structure it once, structure it properly, and you keep full deductibility.

Equity release FAQs

How much equity can I release?
Up to 80% of the property's current value, minus the existing loan balance. Some lenders go to 90% with LMI. The release amount is capped by serviceability — you still need to service the new debt.
Does my existing loan stay the same?
Usually yes. The equity release is added as a new split on the existing lender, or as a top-up on the existing loan. We prefer the split approach for clean accounting.
Can I release equity before I know what I'll use it for?
Lenders will ask for a stated purpose at application. You can change your mind before the funds are used, but redrawing on a purpose-tested split for something deductible and then using it for something non-deductible is exactly the contamination problem.

Related pages

General advice disclaimer. The information on this page is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for you before acting on it, and seek professional advice where relevant.

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