Equity release and cash-out refinancingPut your equity to work.

The basic sum

Equity is the gap between what your property is worth and what you owe on it. Usable equity is the part a lender will let you borrow against. Most lenders work it out from 80% of the property's value, because borrowing above 80% usually means paying lenders mortgage insurance.

For example, if your home is valued at $1,000,000 and your loan limit is $500,000, 80% of the value is $800,000. Take away the $500,000 you owe and your usable equity is about $300,000. That's a simple example, not a promise: the lender's valuation, your loan limits and your borrowing capacity all decide what you can actually access.

Equity and borrowing capacity are separate tests

Having equity doesn't mean you can borrow it. The lender still has to be satisfied you can repay the new, larger debt from your income. Plenty of people have $300,000 of equity on paper but can only service a fraction of it with one lender, and more with another. We test both before you commit to a plan.

Be clear about what the money is for

• Lenders ask what the released funds are for, such as a deposit on an investment property, renovations, or paying out other debt.
• Some purposes need evidence, such as a contract of sale or builder's quotes, and lenders differ on how much they'll release without it.
• Keeping investment funds in a separate loan split makes the purpose clear to the lender and to your accountant. Confirm the tax treatment with your accountant.

Top-up with your current lender

Asking your current lender to increase your loan can be simpler: no discharge, often fewer forms. But you're limited to that lender's valuation, policy and pricing, and their servicing calculator may give you less than others would.

Refinance to a new lender

Moving your loan to a new lender while releasing equity lets you shop the whole market for valuation, borrowing capacity and pricing at once. It involves more paperwork and some switching costs, and some lenders also have rules on how soon after buying you can release equity. We compare both routes and show you the trade-off in plain numbers.

What it can cost

• Government fees to register and discharge mortgages, which vary by state.
• Your current lender's discharge fee if you refinance away.
• Break costs if you're in a fixed rate period. Ask your lender for a figure before deciding.
• Lenders mortgage insurance if you borrow above 80% of the property's value.
• Any application or valuation fees, depending on the lender and the loan.
• We list the expected costs in your strategy so there are no surprises at settlement.

The usual steps

• A 15 minute call to understand your goals and what you own.
• We order or check a valuation, run your numbers across lenders and send you a written strategy.
• Once you choose an option, we prepare the application and manage it to approval and settlement.
• Timing depends on the lender's turnaround and the valuation, so start before you need the money, ideally before you make an offer on your next property.

How much equity can I release from my home?

As a rule of thumb, most lenders let you borrow up to 80% of your property's value without lenders mortgage insurance, less what you already owe. What you can actually access also depends on the lender's valuation and on whether you can service the larger loan from your income.

Can I use equity to buy an investment property?

Yes, many investors do. A common set-up is a separate loan split secured against your home for the deposit and costs, plus a standalone loan for the investment property. See our investment property loans page.

Is it better to top up with my bank or refinance?

It depends. A top-up is simpler, but you're limited to your current lender's valuation and policy. Refinancing lets you compare the market, with some extra paperwork and costs. We compare both and show you the numbers.

Will releasing equity affect my borrowing capacity?

Yes. A larger loan means higher repayments, which lenders count when you apply for your next loan. That's why we plan the release and the next purchase together, rather than one at a time.

What does Magnus Finance charge?

In most cases there is no direct cost to you. Magnus Finance is paid a commission by the lender you choose, and we disclose it before anything is signed.