Guide
Using equity to buy an investment property, structured so it doesn't tangle.
The equity in your home can fund the deposit on an investment property without touching your savings. Done properly it is the cleanest path into property investing. Done lazily it tangles your home, your tax and your next move into one knot. The difference is structure.
- Founded by two former bankers
- Commercial and business finance specialists
- Perth based, working Australia wide
- MFAA member
How the equity play actually works
Rockwall Finance arranges equity release and investment lending for property buyers across Perth and Australia. The mechanics are simple. Your home has equity: its value minus what you owe. Lenders will release part of that equity as borrowing, generally up to 80 percent of the property's value without lenders mortgage insurance. That released money becomes the deposit and costs on an investment property, and a second loan against the new property funds the rest. Your savings stay where they are.
The working numbers: a home worth $900,000 with $450,000 owing has usable equity of around $270,000, which is 80 percent of value minus the debt. That comfortably covers a 20 percent deposit plus stamp duty on a mid range Perth investment property, with the investment loan funding the remaining 80 percent against the new property itself.
The structure at a glance
| Usable equity | Roughly 80 percent of your home's value, minus your current loan balance |
| Loan one | Equity release against your home: funds the deposit and purchase costs |
| Loan two | Investment loan against the new property, commonly 80 to 90 percent of its price |
| Cash needed | Often none, the equity does the deposit's job |
| The real cap | Serviceability: income plus expected rent must support both loans |
| Keep separate | Two standalone loans, never one loan over both properties |
The structure rules that save you later
- Two loans, not one. The equity release and the investment loan stay separate, each secured by its own property. Cross collateralisation, one loan over both, hands the bank more security than it needs and tangles every future sale, refinance or top up.
- Purpose stays clean. Interest deductibility follows what borrowed money is used for, not which property secures it. Equity drawn for the investment is kept in its own split, never mixed with personal spending, so the tax trail stays simple. Your accountant confirms the treatment; we build the structure so there is something clean to confirm.
- Buffer stays in. Releasing every available dollar leaves nothing for the tenant gap, the repair or the rate rise. We size the release with a margin, because the strategy only works if you can hold the asset comfortably.
- Structure for the next purchase. If this is property one of several, the lender choice and loan split today decide how easy property two is. Sometimes deliberately using a second lender keeps both positions cleaner.
What serviceability really decides
Equity gets the headlines, but serviceability sets the ceiling. The lender assesses whether your income plus a discounted share of the expected rent supports the equity release and the new investment loan, with repayments tested at a buffered rate above the actual one. Plenty of households have abundant equity and a serviceability ceiling that arrives first. That is not a dead end; it is a structuring problem. Lender policies differ meaningfully on how they treat rental income, existing debts and expenses, and the difference between the most generous and least generous assessment can be an entire property. Our investment property loan guide covers how lenders assess investors in detail, and our refinance guide covers the home loan side of the restructure.
Equity into a new build: the 2027 angle
Where the equity goes matters more from 1 July 2027. The announced negative gearing changes limit gearing against wages to new builds for properties bought after budget night 2026, which makes equity into a house and land package, an off the plan purchase or a duplex build the strategy that keeps full tax treatment. The equity mechanics are identical; the second loan becomes a construction loan with staged drawdowns. Our guide to the 2027 negative gearing changes covers who is grandfathered and what qualifies, and our construction loan guide covers how the build side works.
Frequently asked questions
How much equity can I use to buy an investment property?
The working rule: usable equity is roughly 80 percent of your home's value minus what you still owe on it. A home worth $900,000 with a $450,000 loan has about $270,000 of usable equity. Lenders generally release equity up to 80 percent of the property's value without lenders mortgage insurance; going above 80 is possible with LMI. The harder limit is usually serviceability: you have to be able to service both the released equity and the new investment loan on your income and the expected rent, and that calculation, not the equity number, is what actually caps most buyers.
Can I buy an investment property with no cash deposit using equity?
Yes, that is the standard play. The equity released from your home covers the deposit and purchase costs like stamp duty, and a separate loan against the investment property funds the rest, commonly 80 to 90 percent of its price. No savings need to be touched. The structure to insist on is two separate loans rather than one loan secured by both properties, which keeps the borrowing clean for tax, keeps each property's finance independent, and avoids handing the bank more security than it needs.
Is the interest on an equity release tax deductible?
Deductibility follows the purpose of the borrowing, not the property securing it. Equity drawn against your home and used to buy an income producing investment property is generally deductible debt, even though it is secured by your own home. The classic mistake is mixing: drawing equity into an account also used for personal spending contaminates the borrowing and creates an accounting headache that can cost real deductions. A clean split loan used only for the investment keeps the trail simple. We set the structure up that way and your accountant or tax agent confirms the treatment for your circumstances.
Should both properties be with the same bank?
They can be, but the structure matters more than the bank. What we generally avoid is cross collateralisation, one loan secured by both properties, which ties the assets together: selling, refinancing or revaluing one property then involves the bank's position on both. Two standalone loans, even at the same lender, keep each property independent. Using different lenders can also be deliberate strategy, since each lender's exposure stays smaller and serviceability policies can be played to your advantage. We structure it for your next move, not just this purchase.
General information only and does not consider your objectives, financial situation or needs. Tax outcomes depend on your circumstances: confirm your position with a registered tax agent or accountant, and we will work alongside them on the lending side. Lending criteria, terms and conditions apply.
Get started
Want to talk it through?
Book a meeting or make an enquiry. We'll tell you whether it's fundable, how we'd structure it, and which lender we'd take it to. No obligation.