What is equity?

Equity is the difference between your property’s value and the loan secured against it.

In simple terms:

  • property value increases over time
  • loan balance reduces as repayments are made
  • the gap between the two is your equity

A portion of that equity can often be accessed to fund your next purchase.

How using equity works

Using equity typically involves releasing funds from an existing property to use as a deposit for another.

This usually involves:

  • obtaining a current valuation of your property
  • determining usable equity based on lender limits
  • setting up or increasing a loan against that property
  • using the released funds as a deposit for a new purchase
  • structuring the new loan alongside the existing one

The structure of these loans is critical — particularly when building a portfolio.

How lenders assess equity access

Lenders don’t simply look at available equity — they assess overall risk.

They will typically consider:

  • current property valuation
  • existing loan balance and loan-to-value ratio (LVR)
  • borrowing capacity across all loans
  • income, expenses and servicing position
  • purpose of funds and overall loan structure
  • credit history and repayment conduct

Different lenders take different approaches, which can significantly impact how much equity you can actually use.

Usable equity vs total equity

Not all equity is accessible.

Lenders typically allow access up to a certain LVR — often around 80% without additional costs.

For example:

  • property value: $1,000,000
  • existing loan: $600,000
  • maximum lending at 80%: $800,000
  • usable equity: $200,000

This usable equity becomes your potential deposit for another property.

Common challenges when using equity

Equity strategies can fail when structure and lender fit are not considered.

Common issues include:

  • overestimating available equity based on outdated valuations
  • not accounting for lender LVR limits
  • insufficient borrowing capacity to support additional debt
  • cross-collateralising properties unnecessarily
  • choosing lenders that restrict future flexibility
  • poor structuring of released funds
  • not planning for future purchases

These mistakes can limit your ability to continue building a portfolio.

How we structure equity-based purchases at Evolve

We focus on creating a scalable and flexible structure from the outset.

This includes:

  • confirming accurate property valuations
  • calculating usable equity based on lender policy
  • assessing borrowing capacity across multiple lenders
  • structuring equity release separately where appropriate
  • avoiding unnecessary cross-collateralisation
  • aligning lender choice with your portfolio strategy
  • planning for future acquisitions, not just the next one

The objective is not just to complete one purchase — it’s to position you for the next.

Speak with a broker before using equity

Using equity can accelerate your investment strategy — but only if it’s structured correctly.

Before proceeding, it’s worth understanding:

  • how much equity you can realistically access
  • how lenders will assess your full position
  • how to structure loans for flexibility
  • which lenders support portfolio growth
  • how to avoid limiting future options

A well-structured approach creates momentum. A poor one can restrict your ability to grow.

Speak with Evolve Lending & Finance to review your structure and next steps.