From Owner to Investor: Use Equity to Grow Your Property Portfolio

If you’re a Melbourne homeowner, you might be sitting on a powerful financial resource without even realising it: equity. This is more than just a number on paper. It can be the key to unlocking your next investment property without needing to save another full deposit from scratch.

Whether you're planning for long-term wealth, looking to generate rental income or simply want to make your money work harder, using equity from your current home can be one of the most effective ways to build a property portfolio. Here’s how it works.

1. What Is Equity and How Does It Work?

Equity is the difference between your property’s current market value and the amount you still owe on the mortgage. If your home is worth $900,000 and you owe $500,000, your total equity is $400,000.

But not all of that can be used. Lenders generally allow access to up to 80% of your property’s value, minus what you owe. This is known as usable equity and it can be used as a deposit for your next property purchase. Instead of saving tens of thousands of dollars over the years, you could be in a position to invest much sooner by tapping into what you already own.

2. Why Use Equity to Invest in Property?

Using equity allows you to invest without dipping into your savings. It can be a faster path to growing your portfolio, particularly in markets like Melbourne where property prices continue to trend upward in sought-after suburbs.

There are other benefits too:

• You keep living in or renting out your existing property
  You may be able to claim tax deductions on interest and depreciation for the new investment
• You continue to build wealth through both capital growth and rental income
  
  

It’s a strategy used by many successful investors to gradually scale up without needing large sums of cash upfront.

3. How Much Equity Do You Need to Start?

Most lenders will allow you to borrow up to 80% of your property's value. So if your home is worth $900,000, 80% is $720,000. Subtract your remaining mortgage ($500,000) and your usable equity is $220,000.

This amount could potentially fund the deposit and upfront costs of your next investment. If you choose to borrow above the 80% threshold, Lenders Mortgage Insurance (LMI) may apply, which is an added cost to consider. A mortgage broker can help assess your borrowing power and whether paying LMI is worthwhile in your scenario.

4. Steps to Using Your Equity for Investment

Ready to make your move? Here’s how to start:

1. Get a valuation: Know how much your property is worth today.
2. Work out your usable equity: Your lender or broker can help crunch the numbers.
3. Explore your loan options: Fixed or variable? Offset account? Interest-only or principal and interest?
4. Choose your investment strategy: Long-term capital growth, high rental yield or a balance of both.
5. Get pre-approval and start the search: Focus on areas with strong fundamentals like transport, schools and lifestyle appeal.
   
   

5. Risks and Considerations

Every investment comes with risk and using equity is no different. Key factors to weigh up include:

• Higher repayments: Borrowing more means a larger loan to service.
• Market changes: Property values can rise or fall, which affects your equity position.
• Overleveraging: Borrowing too much without proper buffers can put pressure on your finances.
• Quality over quantity: It’s better to buy one high-performing asset than two average ones.
• Financial planning: Always account for vacancy periods, maintenance and interest rate shifts.
  
  

A well-planned investment approach and clear exit strategy are essential.

6. Real Example: Equity in Action

Let’s say you bought a family home in Glen Iris a few years ago. The property is now worth $1.3 million and you’ve paid down your mortgage to $650,000. That gives you about $390,000 in usable equity.

With this, you could purchase a 2-bedroom off-the-plan apartment in Burwood, Ivanhoe or Sandringham through Norus Projects. These suburbs offer excellent potential for capital growth and strong rental demand thanks to quality schools, shopping centres and access to public transport. A new apartment also comes with higher depreciation benefits, which can improve your cash flow at tax time.

7. Is It the Right Move for You?

Using equity isn’t a one-size-fits-all strategy. Consider your:

• Income stability and monthly budget
• Stage of life and future plans
  Comfort with risk and market changes
  
  

It’s wise to speak with a broker, accountant or financial adviser before making decisions. They can help map out a tailored plan based on your personal goals. You can also use online equity calculators to get a rough estimate of your borrowing potential.

Conclusion: Take the First Step Toward Becoming an Investor

Many property portfolios start with a single home. Over time, equity grows, quietly building your financial potential. The key is to recognise when it’s time to use it and take action.

By leveraging equity, you can step into your next property sooner, grow your assets and set the foundation for future financial freedom.

Thinking about using your equity? Speak to our team today to explore your next move.
Norus Projects is here to help you take that first step with high-quality off-the-plan apartments in Melbourne’s most liveable suburbs.

*Please refer to the Federal and State Government websites for further information. Terms and Conditions apply to any other promotions that may be contained within this communication. Please enquire within and check with the vendor and agent for further terms and conditions. Only one promotion can be used per purchase and can not be used in conjunction with any other promotions. The information contained herein is given for general information purposes only and it is subject to change. Readers, viewers and consumers are advised to perform their own research and investigations and obtain their own financial, legal and other advice. The information and materials do not form any representation by any vendors or agents of any vendors and may include third-party opinions that do not represent the opinion of any vendor or agent. They do not form part of any contract of sale and they do not constitute legal, financial, real estate or other advice and must not be regarded or relied upon as such. No warranty is given either expressly or implied and the vendors or agents do not assume liability for negligence or otherwise with respect to the contents herein. Any plans are yet to have had their structural and services review so are subject to change prior to completion of construction. All plans, dimensions, areas and particulars herein whether by measurements or visual representation are approximate only, for general information only, and do not constitute any representation by the vendor or its agents or representatives. They do not form part of any contract of sale. Changes will undoubtedly be made during development and dimensions, fittings, finishes and specifications are therefore subject to change. Any furniture, goods and chattels depicted in this document are not included with any sale. Prospective purchasers or lessees are advised to not to rely on the information contained herein and to satisfy themselves as to the accuracy of all information given by making their own inspections, searches, inquiries and advises or as is otherwise necessary. The vendor or its agents or representatives will not be responsible for any error or misdescription which may appear. Further, the vendor or the developer or their agents or representatives do not represent, warrant and/or guarantee that the integrity of this communication has been maintained or that the communication is free of errors, virus, interception or interference. Usage of this or any other websites and materials and any associated website or material is subject to further terms and conditions.