Do I need to save another 20% deposit for a second property?

Not if you have enough equity in your current property. The equity can be released to fund the deposit on the next purchase, as long as your income supports both loans.

How much equity can I pull out of my home?

Most lenders let you take the loan up to 80% of the property's value without LMI, and some go to 90% or 95% with it. Dollar caps and evidence requirements vary a lot between banks.

Will I pay LMI on my second home?

Only if cash plus equity comes to less than 20% of the new purchase and you don't qualify for an occupation-based waiver.

Does releasing equity increase my repayments?

Yes. The loan on your current property goes up by the amount released, and the repayment with it.

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Do I need to save a full 20% deposit again for my next home?

Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 4 min read

The short answer

No. If your property is worth more than what your loan is, that gap is equity, and we can pull money out of it to help fund the 20% deposit on what you want to buy next.

If for any reason you don't have the full 20% available, in cash or in equity, then the loan on the next place sits above 80% of its value and you're paying lenders mortgage insurance, unless your occupation qualifies for a waiver. How much equity a bank lets you pull, and at what loan-to-value ratio, is where the lenders differ.

The one minute version. The rest of this page is the detail underneath it.

Equity is the deposit you didn't have to save

If you have equity, meaning your property's worth more than what your loan is, and we can pull money out of your property to help fund that next 20% deposit on what you want to buy next, then no, you don't need to have saved that amount again.

Say your place is worth $700k and the loan is $450k. Taking the loan up to 80% of value, which is $560k, releases $110k. That's the deposit and costs on the next purchase without a dollar of new savings. The bank still has to be happy you can service $560k plus the new loan, which is the part people skip: equity isn't borrowing power.

Where 20% comes up short

However, if when you go to buy your next place you do not have the full 20% available, in either cash or equity, then you're going to be paying lenders mortgage insurance, because your loan will be more than 80% of what the new property is worth.

Unless you're under one of the LMI waivers for an eligible occupation, LMI generally applies, and you weigh up whether it makes sense to wait or whether you're happy to pay it to support that next purchase. The same maths as a first purchase, on what LMI costs, just with a bigger loan behind it.

How banks differ on releasing equity

Every lender layers three gates over the servicing test. First, how much you can pull out without proving what it's for: some banks have no cap and just record the purpose, others stop at a set dollar figure, from a few hundred thousand down to a hundred thousand at the tightest. Second, how high the loan-to-value ratio can go on an equity release: some lenders go to 90% or 95% with LMI, a couple stop dead at 80% and won't release a dollar above it, and one or two won't do equity release at all.

Third, what changes above 80%. That's where hard dollar caps appear, where some banks want evidence of the purchase contract for every dollar, and where investment-purpose releases get their own limits. A purchase contract is accepted evidence everywhere, so buying a specific property is the easy case. Releasing cash to sit in an account while you look is the case that trips the caps.

The honest bit: releasing equity resets the loan on your first place

Pulling $110k out of your current home means the loan on it goes up by $110k, and so does the repayment. If that place is becoming a rental, fine, the rent helps and the interest on the released portion is generally deductible against it. If you're selling it, the release is short-lived and a bridging conversation might be cleaner.

The version of this that goes wrong is releasing equity to the maximum, buying at the top of the borrowing number, and having no buffer in either loan. Two mortgages with no fat is a stressful way to live.

Want to know how much your current place could release?

A 30 minute call. I order a valuation on your current property, work out the usable equity at 80% and above, and show you what the next purchase looks like with and without LMI.

Book a 30 minute call Call 0437 189 939

No cost to you. The bank pays me when a loan settles. · How I get paid

Next question

Can I borrow extra at purchase to fund the renovations?

Same equity, different job for it.