How much equity can I use for an investment property?

Generally up to 80% of the bank's valuation of your property, less what you still owe. For example, valued at $800k and owing $400k, roughly $240k may be usable, if you can afford the repayments.

Can I borrow more than 80% of my property's value?

Some banks will go above 80% for equity release, but you'll generally pay lenders mortgage insurance, and many lenders cap the cash and want to know what it's for.

Why does the valuation matter when using equity?

Your usable equity is 80% of the valuation minus your loan. Every extra dollar of valuation adds 80 cents of usable equity, which is why getting more than one valuation can help.

Do I have to tell the bank what the equity is for?

Often, yes, especially once the amount gets large. A contract of sale for the next property is the usual evidence when you're buying.

Is equity the same as borrowing power?

No. Equity is the security. You still need the income to afford the repayments on the bigger loan, which is what decides whether you can use it.

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How much of my equity can I actually use to fund the next property?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read

The short answer

All the way up to that magic 80% of what a bank values your property at. That 80% is your total lending, so whatever you still owe comes off the top first, and what's left is the equity you can generally use.

Some banks will let you go above 80%, but you'll pay for things like lenders mortgage insurance. And you still have to be able to afford the repayments on whatever you borrow. Rule of thumb: 80% is the magic number.

The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.

How the 80% works, with numbers

Say the bank values your place at $800k and you owe $400k. 80% of $800k is $640k. Take off the $400k you already owe and there's roughly $240k you could pull out to use as the deposit and costs for the next property, provided you can service the extra borrowing.

That's the bit people miss. Equity isn't 80% of the value sitting there in cash. It's the gap between 80% of the value and your current loan. And it's not free money either: it's a bigger loan, with repayments, so the bank checks your income can carry it just like any other borrowing.

Why the valuation decides everything

Every dollar the valuation goes up adds 80 cents to what you can use. On the example above, if the bank values the place at $850k instead of $800k, 80% becomes $680k and your usable equity jumps from $240k to $280k. It's really as simple as that.

Which is why sometimes it makes sense to get a couple of opinions on what your place is worth. Different banks use different valuers, and the numbers can come back noticeably apart on the same property. If your goal is to pull out as much cash as possible as the deposit for the next one, ordering valuations with a few lenders before choosing where to go can be the difference between buying now and waiting another year.

Going above 80%

Some banks will let you borrow past 80% of the value when you're releasing equity, and a few will go quite a bit higher. But above 80% you're generally paying lenders mortgage insurance, which is a cost added to your loan, and the rules tighten. Many lenders cap how much cash you can take out above 80%, and more of them want to see what the money is for.

Even under 80%, a lot of lenders want evidence of the purpose once the cash-out gets large, like a contract of sale for the next property. That's normal and easy to provide when you're buying. It's just worth knowing the bank will ask.

The honest bit: equity isn't borrowing power

You could have all the equity in the world and still not be able to use it if your income doesn't support the bigger loan. It's an income versus expenses conversation, and the bank looks at the repayments on everything you'd owe after the next purchase, not just the new bit.

So the real question isn't only how much equity you have, it's how much you can afford to borrow against it. Work both out together before you start looking.

Want to know how much of your equity you can actually use?

A 30 minute call. We look at what your place might value at, what you owe, and what your income supports, so you know your real number for the next one.

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Next question

Why doesn’t my equity count as borrowing power?

Because you have to borrow it, and borrowing has to be repaid over 30 years.