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 funds the next deposit without touching your savings or contaminating your deductibility.
The deductibility test
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 isn't. Mix the two in one loan account and you've contaminated deductibility. That is painful to untangle, and sometimes it can't be fixed without a full restructure.
The clean approach is a separate split for the released equity, held in its own loan account with a clear, documented purpose. When funds leave that account they should go straight to the investment purpose. Don't park them in savings in between, and don't spend them on personal items planning to 'top up' later. Set the structure up properly once and you keep full deductibility.
Equity release FAQs
How much equity can I release?
Does my existing loan stay the same?
Can I release equity before I know what I'll use it for?
Related pages
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