The equity in your home can fund the deposit and costs on an investment property without touching your savings. How the release is structured decides whether its interest stays clean and deductible.
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Equity is your home's value minus what you owe. Usable equity is the part a lender will let you borrow against, usually up to 80% of the value without lenders mortgage insurance.
An illustrative sketch, not a quote. Home valued at $1,000,000, loan of $450,000. 80% of the value is $800,000, so usable equity is $800,000 less $450,000, or $350,000 before costs. Your lender's valuation, policy and your servicing decide the final figure.
The valuation is the lender's, not the agent's appraisal. We order indicative valuations across lenders before you commit, because a lower figure changes the plan. Our LVR calculator gives a quick first estimate.
The equity release should sit in its own loan split, with its own account number, used only for the deposit, stamp duty and purchase costs on the investment property. Do not increase or redraw on your existing home loan split.
The ATO links interest deductibility to what the borrowed money is used for, not what secures it. Where one loan account funds both private and rental purposes, the ATO says the interest has to be separated, and repayments split across both portions for the life of the loan. A dedicated split avoids that apportionment from day one.
Because the deposit borrowing is used to buy an income-producing property, its interest is generally deductible. Your registered tax agent confirms the treatment for your situation. See how we build a split loan structure.
Cross-collateralisation is when one lender takes both properties as security for a combined set of loans. It can look simpler at the start, but it ties the properties together.
A standalone structure is usually cleaner: the equity release is secured by your home, and the investment loan is secured by the investment property alone. Many lenders allow this, and it can sit with the same lender or two different ones.
Equity gets you a deposit. Income decides whether you can borrow the full amount. Lenders assess the combined repayments on your home loan, the equity release split and the investment loan against your income.
A fully assessed pre-approval before you make offers removes most of the finance risk from the purchase.
If you hold savings in an offset or cash, using them directly as a deposit leaves your home loan non-deductible. Paying the home loan down first, then borrowing the deposit back as a separate investment split, changes the tax character of the same dollars. That is debt recycling applied to a property purchase.
In our $390K equity case study, a couple used $465,000 of offset savings to cut their home loan from $525,000 to $60,000, then drew $390,000 as a separate investment split for the deposit and costs on a $1,400,000 investment property, alongside a $1,120,000 purchase loan.
The order and the paper trail matter. The pay-down, the new split and the purchase need to happen as separate, documented steps, and your tax agent should confirm the plan before any money moves. Our guide to how much equity you need for debt recycling covers the starting point.
The 2026-27 Budget limited negative gearing for established residential property, and the ATO says the measures are now law. From 1 July 2027, losses on established residential property bought after 7:30pm AEST on 12 May 2026 can only be deducted against residential property income, including capital gains. Properties held before that time, and new builds, are exempt.
Excess losses on affected properties carry forward to later years, but cannot reduce tax on wages. This changes the cash flow maths on a negatively geared established purchase, not the loan structure.
Your registered tax agent confirms how the change applies to your purchase. Our guide to debt recycling vs negative gearing explains the difference.
A couple used $465,000 of offset savings to pay their home loan down from $525,000 to $60,000, then borrowed $390,000 back as a separate deductible split for the deposit and costs on a $1.4m investment property. A $1,120,000 purchase loan at 80% of the price completed the lending.
Read the Case Study →Borrowing against your home puts it at risk if the investment or your income falls short, so the buffer is not optional.
Tell us where you are and what you want to do next. We will tell you what the lending side looks like, including whether debt recycling fits later.
Request a Call With Alex →Indicative valuations and a servicing check across suitable lenders.
A dedicated split for the deposit and costs, secured by your home.
A standalone investment loan, assessed before you make offers.
Each split used only for its purpose, with records your accountant can follow.
Usually up to 80% of your home's value, less what you owe, before lenders mortgage insurance applies. A $1,000,000 home with a $450,000 loan has about $350,000 of usable equity on that basis. The lender's valuation and your ability to service all the loans set the final figure.
Generally, yes, if the borrowed money is used to buy a property that is rented or available for rent. The ATO looks at how the money is used, not what secures it. Keeping the deposit borrowing in its own split keeps that clear. Your registered tax agent confirms the treatment for your situation.
You can, but avoid having one lender cross-collateralise both properties. A standalone structure, with the equity release secured by your home and the investment loan secured by the new property, keeps them independent. That makes later sales, refinances and valuations simpler. Many lenders allow it, and some clients use two lenders.
You can, but cash used directly leaves your home loan non-deductible. Some buyers instead pay the savings into the home loan first, then borrow the deposit back as a separate investment split. That sequence has to be documented carefully, and your tax agent should confirm it before any money moves.
It may if you buy established residential property after 7:30pm AEST on 12 May 2026. From 1 July 2027, losses on those properties can only be deducted against residential property income and capital gains, with any excess carried forward. New builds and properties held before then are exempt. Your registered tax agent confirms how it applies to you.
Property as the recycled asset, and how the loan is built.
Read more → SERVICEStructuring lending across a growing portfolio.
Read more → GUIDETwo strategies, and how the 2026 Budget changes the comparison.
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1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
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