What Exactly Is Equity?
In simple terms, equity is the difference between your property’s market value and how much you still owe on your loan.
If your home is worth $800,000 and your remaining mortgage is $500,000, your equity is $300,000.
It’s one of the most powerful tools in your property journey. As your property increases in value and your loan balance decreases through repayments, your equity grows. This growth allows many investors to pay off their home loan faster or even leverage equity to buy more properties.
You can read more about how timing and market growth impact property value in our blog, When Is the Best Time to Buy Property? (Spoiler: It’s Sooner Than You Think).
How Equity Builds Over Time
There are two main ways equity builds:
- Capital Growth – When property values rise, so does your equity. For example, if your property increases from $700,000 to $800,000, that’s $100,000 of additional equity without lifting a finger.
- Loan Repayments – Every repayment you make reduces your loan balance and increases your ownership share.
It’s why property remains one of Australia’s most stable wealth-building strategies. As we discussed in Superannuation Alone Isn’t Enough: How Property Helps Women Build Real Wealth, property investment can do far more for your long-term financial security than relying on your super alone.
How Can You Access the Equity in Your Property?
Once you’ve built up enough equity, you can unlock it to access funds for different purposes, including paying down your mortgage, investing further, or funding renovations. Here are the most common ways to do it:
- Refinancing – You can refinance your existing loan and increase the amount borrowed against your property’s current market value.
- Redraw Facility – If you’ve made extra repayments, you may be able to redraw the surplus funds.
- Loan Top-Up – Some lenders allow you to top up your existing loan rather than start a new one.
Each option comes with its own benefits and risks, so it’s worth speaking to your broker or lender to determine what suits your goals best.
Can You Use Equity to Pay Off Your Mortgage?
Yes, and this is where things get exciting.
By accessing the equity in your investment property, you can use those funds to pay off or reduce your home mortgage faster. This strategy works best when your investment property is positively geared (meaning it’s generating income through rent that covers the mortgage and expenses).
For example:
Let’s say your investment property is valued at $800,000, with a loan of $500,000. You’ve built $300,000 in equity. If your lender allows you to access up to 80% of the property’s value ($640,000), you could release around $140,000 ($640,000 – $500,000).
That money could go toward paying down your home loan or reinvesting into another property, helping you build wealth faster through compound growth.
Does Using Equity Increase Your Loan?
Yes. When you tap into your equity, you’re borrowing against it, which increases your loan balance.
However, when used strategically, this can work in your favour.
As we covered in Not All Debt Is Bad: Here’s How to Use It to Your Advantage, good debt (like property investment loans) can help you generate income, grow assets, and reduce bad debt like personal or credit card loans.
The key is to use equity wisely for wealth creation, not consumption.
How to Use Property Equity Safely
It’s important to remember that using equity isn’t free money; it’s a financial tool.
Before accessing it, ensure you:
- Speak with your broker about serviceability (your ability to repay the increased loan)
- Have a clear strategy for the funds, whether it’s debt reduction or portfolio growth
- Understand how your repayments may change once you’ve drawn on equity
If used effectively, equity can open the door to new opportunities, allowing you to invest in more properties or pay off your home faster without increasing your day-to-day burden.
For insights on choosing the right property to maximise long-term growth, check out How to Choose the Best Location for an Investment Property in 2025.
The Bottom Line
Unlocking equity is one of the smartest ways to accelerate your property goals, but it’s not a one-size-fits-all approach.
Used carefully, it can help you pay off your mortgage faster, expand your investment portfolio, or simply gain more financial freedom.
And remember, your property is a long-term business decision, not a short-term fix. When managed strategically, it’s one of the most powerful assets you’ll ever own.
Ready to start unlocking your property’s potential?
Talk to our team at InvestHer Property about how you can use your equity to grow your portfolio and build the financial future you deserve.