Key takeaways:
Home equity can help fund renovations, debt consolidation or investment opportunities, but it increases your overall debt and repayments.
The amount of usable equity is often lower than homeowners expect because lenders typically limit borrowing to 80% of a property's value.
Loan structure matters, particularly for investors, as mixing personal and investment borrowing can affect tax outcomes.
Proposed negative gearing changes are causing some investors to reassess how and when they use equity to purchase property.
An Aussie Broker can help homeowners understand their borrowing power, repayment scenarios and loan structure options before accessing equity.
For some Australians, end of financial year (EOFY) is prompting a different kind of financial review.
Not whether they should buy a new car before 30 June or chase a last-minute tax deduction. But whether the equity they've built in their home could help them achieve their next goal.
For some households, that goal is a renovation that has been sitting on the wish list for years.
For others, it is consolidating debt to improve cash flow after a period of rising living costs and higher interest rates.
Some are considering whether equity could help fund an investment property purchase, while others simply want a clearer picture of how their financial position has changed after years of mortgage repayments and property value growth.
EOFY can be a useful time to review those questions.
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Income for the year is largely known, tax obligations are becoming clearer and many Australians are already taking stock of their broader financial position.
But while many homeowners may have built substantial equity over time, advisers and brokers say borrowing against it should be approached carefully.
"Equity is borrowing. Always,” said financial adviser and BuildMyWealth director Sangram Rana. "The fact that the security sits against an asset you already own does not change that."
That distinction matters because equity can create opportunities, but it can also create additional risk if borrowers don't fully understand how it works.
What is home equity?
Home equity is the difference between your property's current value and the amount you still owe on your home loan. For example:
Property value: $900,000
Outstanding loan balance: $500,000
Total equity: $400,000
However, total equity and usable equity are not the same thing. Most lenders allow borrowers to borrow up to 80% of a property’s value before Lenders Mortgage Insurance (LMI) may apply.
Using the same example:
80% of $900,000 = $720,000
Less current loan balance of $500,000
Potential usable equity = $220,000
For homeowners, this means the amount available to borrow may be considerably lower than the headline equity figure.
Understanding that number early can help avoid making plans based on money that may not actually be accessible.
The Aussie App's property tracking tool provides an estimated property value and equity position based on available market data. These estimates are indicative only and do not replace a formal valuation or lender assessment.
Why more homeowners are reviewing equity right now
While EOFY itself doesn't change how equity works, it often creates a natural opportunity to assess bigger financial decisions.
Some homeowners are reviewing whether renovations still make more sense than moving.
Others are reassessing investment plans following the Federal Budget's proposed changes to negative gearing and capital gains tax.
Many are simply trying to understand how rising interest rates and cost-of-living pressures have affected their ability to borrow.
Rana said homeowners should view equity as borrowing capacity rather than available cash.
"The common thread. People treat equity as cash. It is not,” he said. "It is borrowed money secured against the family home."
For homeowners considering using equity, understanding the numbers before making a decision may be more important than trying to act before EOFY.
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Renovate, invest or reduce debt? How homeowners are using equity
Homeowners access equity for a range of reasons, including renovations, investing and debt consolidation.
Renovating instead of upgrading
For many homeowners, rising property values have created an unexpected dilemma.
While their own home may have increased in value, so has the property they hoped to buy next.
That can make upgrading more expensive than expected.
Rather than paying stamp duty, agent fees and taking on a larger mortgage, some homeowners are investigating whether renovating the property they already own could be a more practical alternative.
Aussie Broker, Matthew Bulmer, said this trend has become increasingly common in Western Australia.
"Properties have become so expensive that people initially look at the equity they've built and think they can upgrade,” he said. "Then they realise that everything they want to buy has also increased in value.
"As a result, they're looking at what renovating might cost instead."
For some households, that may improve lifestyle without the costs associated with moving.
However, borrowers should remember that equity used to renovate a principal place of residence is generally considered personal borrowing rather than investment borrowing.
That distinction can have tax implications.
Funding an investment purchase
Another common use of equity is helping fund the deposit on an investment property.
Rather than accumulating a cash deposit separately, some investors leverage equity from their existing home.
Marianna Agostino, financial consultant at Conscious Wealth Creation, believes equity can play a valuable role when used strategically.
“Accessing equity can make significant financial sense ... that said, I consistently steer clients away from leveraging [equity] to fund a lifestyle or to acquire depreciating assets," she said.
“An 'equity to invest' strategy needs to be exactly that – a strategy.”
However, she warns that borrowing should be linked to a clear long-term strategy rather than consumption.
"I consistently steer clients away from leveraging to fund a lifestyle or to acquire depreciating assets,” she added.
"Borrowing against your home to pay for a holiday, a new car, or a wedding doesn't create opportunity."
Importantly, the investment landscape is also changing.
The Federal Government has proposed changes to negative gearing that would, if legislated, limit future negative gearing benefits for established residential investment properties purchased after 7:30pm AEST on 12 May 2026, while new-build properties would remain exempt. The reforms are proposed only and have not yet become law.
While the reforms are proposed only and not yet law, some brokers say the announcement has already become part of investor conversations.
Nick Jones of Aussie Belmont said some clients have paused plans to purchase investment properties until there is greater clarity.
"We've had investors literally just put the brakes on,” he said.
“I've probably had about 10 people over the last two weeks since the budget came out email me and say, 'We've already got the pre-approval in place, but we're going to sit tight for six months and wait and see what happens.'”
For homeowners considering using equity to invest, the practical takeaway is not necessarily to delay, but to understand how the proposed rules could affect cash flow, borrowing capacity and long-term returns.
An Aussie Broker can help you understand how different lending scenarios may affect your borrowing power and repayments. If you're considering the tax implications of an investment strategy or loan structure, consider seeking advice from a qualified tax professional.
Consolidating debt
Debt consolidation is another reason some homeowners consider accessing equity.
Replacing higher-interest debts such as personal loans and credit cards with home loan debt can reduce monthly repayments and simplify finances.
However, lower repayments do not automatically mean lower costs over time.
Extending short-term debt across a 20 or 30-year mortgage can increase the total interest paid unless borrowers actively work to reduce the balance.
Jones said debt consolidation enquiries have become more common as borrowers adjust to higher rates.
"People are using equity to consolidate car loans, credit cards and those sorts of debts,” he said. "That's where a lot of enquiries are coming from at the moment."
For households feeling pressure on monthly cash flow, understanding both the short-term relief and long-term cost is critical before proceeding.
The loan structure mistake many investors don't realise they're making
While accessing equity may appear straightforward, advisers say the biggest mistakes often occur after the money is released.
Agostino said loan structure is one of the most overlooked issues.
"The biggest mistake here is not planning the structure and considering the tax consequences."
"Too many times I see clients come to me well after the fact; had we tweaked the loan structure or changed the borrowing entity the risks and tax effects could have been more advantageous to the client."
One of the most commonly misunderstood issues is mixing personal and investment borrowing.
According to ATO Taxation Ruling TR 2000/2, redraw funds are treated as a new borrowing and the deductibility of interest depends on how those funds are used.
Agostino said many investors accidentally create problems by mixing purposes.
“Another common mistake here is contaminating the loan; that is, taking a loan out for a deductible purpose and then mixing the use of funds with something personal,” she said.
For example, drawing funds from a loan used for investing and then using part of those funds for a private renovation or personal expense can complicate interest deductibility.
EOFY may also be a useful time to review loan structures, investment plans and debt levels while income, tax records and broader financial goals are already under review.
The key takeaway is that how equity is accessed can matter just as much as why it's being accessed. Understanding the structure upfront may help homeowners make more informed decisions before taking on additional debt.
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Questions to ask before accessing equity
Strong property price growth over recent years has increased equity levels for many homeowners. But access to equity doesn't automatically mean borrowing is appropriate.
Before increasing the size of a home loan, homeowners may want to consider:
What is the purpose of the borrowing?
Will the borrowing improve cash flow, lifestyle or long-term financial goals?
Could the same goal be achieved without taking on additional debt?
How would repayments change if interest rates increased further?
How long do you expect to hold the debt?
If the funds are being used for investment purposes, have you considered the tax and structuring implications?
Rana encourages clients to focus on serviceability rather than asset values alone.
"The test I use with clients: if interest rates rise two percentage points and rents stay flat, can you still service the loan without selling? If not, the equity is theoretical, not usable,” he said.
That mindset can help homeowners separate borrowing capacity from financial readiness.
In practical terms, borrowers should consider:
Whether they can comfortably manage higher repayments
Whether the purpose of the borrowing aligns with long-term goals
How the additional debt could affect future flexibility
Whether alternative options may achieve the same outcome with less risk
An Aussie Broker can help you understand your borrowing power and explore how different loan scenarios may affect repayments and future plans.
The bottom line
For some Australians, reviewing their equity this EOFY may confirm they are ready to take the next step.
For others, it may simply provide a clearer understanding of their financial position.
Both outcomes can be valuable.
In a market where interest rates, lending conditions and proposed tax settings continue to evolve, understanding what you can afford, what you can borrow and the trade-offs you're comfortable making may matter more than trying to perfectly time a decision.
In many cases, the most important question isn't how much equity you can access, but whether accessing it helps achieve the outcome you're aiming for.
The Aussie App can help you understand your current property value and equity position.
If you're considering accessing equity, an Aussie Broker can help model different scenarios and explain how additional borrowing could affect your repayments, borrowing power and longer-term goals before you decide whether it's the right move for you.