After years of repayments and rising property values across much of the country, many accountants are sitting on more equity in their home than they realise, and that equity can fund the deposit on an investment property without saving a fresh sum from scratch. With variable rates around the 6% mark and lenders assessing every loan at the actual rate plus 3 percentage points under Australian Prudential Regulation Authority (APRA) rules, using existing equity efficiently has become one of the more sensible ways into the investment market. For accountants, though, the structuring decisions carry tax consequences that a generic approach can quietly get wrong.
Because the way you release and structure equity affects both your borrowing power and the deductibility of the debt, this is an area where a mortgage broker for accountants adds real value. This article explains what equity you can actually use, how your profession can unlock more of it, why serviceability still sets the ceiling, and how to structure the loan so the tax outcome works in your favour.
What Equity Is, and What You Can Actually Use
Equity is the difference between your property’s current market value and the amount you still owe, but the figure you can borrow against is smaller than your total equity. Lenders work on usable equity, which is generally 80% of the property’s value minus the loan still owing.
The distinction matters. If your home is valued at $800,000 and you owe $400,000, your total equity is $400,000, but your usable equity is 80% of $800,000, which is $640,000, less the $400,000 owed, leaving $240,000. That usable figure, not the headline equity, is what funds your investment deposit and purchase costs.
How Accountants Can Unlock More Usable Equity
This is where the profession offers a genuine advantage that most borrowers never access. Eligible accounting professionals can often borrow up to 90% loan to value ratio (LVR), and in some cases 95%, without paying Lender’s Mortgage Insurance (LMI), which lifts the usable equity ceiling above the standard 80%.
Using the same example, an eligible accountant assessed at 90% could draw on 90% of $800,000, which is $720,000, less the $400,000 owed, leaving $320,000 of usable equity rather than $240,000. That extra $80,000 can be the difference between affording a particular investment property and missing it. Eligibility usually rests on current, practising membership of a body such as Chartered Accountants Australia and New Zealand (CA ANZ), CPA Australia, or the Institute of Public Accountants (IPA), and the concession applies to investment lending, not only owner-occupied purchases.
Serviceability Still Decides the Limit
Usable equity sets a ceiling, but it does not guarantee you can borrow to it, because the lender still has to be satisfied you can service the additional debt. This is the step that catches people who focus only on the equity figure.
The assessment runs at your actual rate plus the 3 percentage point buffer, rental income is usually discounted to around 80% to allow for vacancy and costs, and existing commitments such as credit card limits and other loans reduce what is left. For self-employed accountants and firm partners, the income the lender recognises depends heavily on how the financials are read, including which add-backs are applied, so the same equity can support very different borrowing depending on the lender. The practical point is simple: confirm both your usable equity and your serviceability before you start looking, not after.
Structuring the Loan the Right Way for Tax
For an accountant, the structure is where this strategy is won or lost, because the deductibility of interest follows the use of the borrowed funds, not the property they are secured against. Getting the structure right from the outset avoids problems that are awkward and costly to unwind later.
Keep the Investment Debt in a Separate Split
The cleanest approach is to release the equity into a separate loan split or supplementary loan account dedicated to the investment deposit and purchase costs, kept apart from your home loan. This keeps the deductible investment borrowing cleanly identifiable and simple to substantiate. Drawing the equity through a redraw on your existing home loan, then using it for the investment, tends to create a mixed-purpose loan that has to be apportioned for its life, which is exactly the contamination accountants advise their own clients to avoid.
Avoid Unnecessary Cross-Collateralisation
Lenders will sometimes default to securing the new investment loan against both your home and the new property, known as cross-collateralisation. While it can ease approval, it reduces your flexibility to sell or refinance one property without involving the other, and it can complicate the release of security down the track. Keeping the properties separately secured is often preferable, though there are cases where cross-securing genuinely helps, so it is a decision to make deliberately rather than by default.
Match the Repayment Type to the Strategy
Investment debt is frequently set up as interest-only to support cash flow and preserve the deductible balance, while principal-and-interest steadily reduces what you owe. Interest-only lowers short-term repayments but costs more over time and is often assessed more conservatively for serviceability. A common structure is principal-and-interest with an offset on the non-deductible home loan, and interest-only on the deductible investment split, but the right mix depends on your cash flow and goals.
Weighing the Risks Before You Draw
Releasing equity increases your total borrowing, so it deserves the same caution you would apply to any client’s strategy. A few risks are worth holding clearly in view before you proceed.
- Property values can fall, which reduces your available equity and, in a serious downturn, can leave you owing more than a property is worth.
- Drawing on all your usable equity leaves no buffer, so keeping a reserve for repairs, vacancy, or a change in income is the more resilient approach.
- Rising rates and vacancy periods both stress cash flow, so test your position against a higher rate and a month or two without rent before committing.
A Practical Sequence for Accountants
Putting the pieces together in the right order keeps the strategy efficient and the tax position clean. The following sequence works well for most accounting professionals.
- Confirm your usable equity, including whether a professional LMI waiver lifts your ceiling from 80% toward 90%.
- Check serviceability using your genuine income, with the appropriate add-backs applied, rather than your taxable income alone.
- Set up the equity release as a separate split structured for deductibility, kept apart from your home loan.
- Obtain valuations through a lender that values your property fairly, since valuations vary and a higher one unlocks more equity.
- Decide deliberately whether to cross-secure, defaulting to separate security unless cross-collateralisation clearly serves you.
- Keep a financial buffer, and confirm the tax treatment with your adviser so the structure supports your deductions from day one.
Frequently Asked Questions (FAQs)
How much equity can I actually access?
As a general rule, usable equity is 80% of your property’s current value minus the amount you still owe. Eligible accountants can often push that ceiling toward 90%, sometimes 95%, without LMI, which unlocks more usable equity. The final figure you can borrow is then limited by serviceability, so usable equity is the starting point rather than the guaranteed amount.
Is the interest on equity I use for investment tax-deductible?
Generally, interest is deductible to the extent the borrowed funds are used to produce assessable income, such as buying an investment property. Deductibility follows the use of the money, not the property used as security, which is why keeping the investment borrowing in a separate split matters. Your specific position should be confirmed with your tax adviser.
Should I cross-secure my home and the new investment property?
Often it is better not to. Cross-collateralisation can make approval easier but reduces your flexibility to sell or refinance one property independently and can complicate releasing a security later. Separate security is usually cleaner, though there are situations where cross-securing genuinely helps, so it is worth weighing rather than accepting by default.
Does using equity mean I do not need any cash?
Equity can cover the deposit and upfront costs such as stamp duty and legal fees, so you may not need a separate cash deposit. Even so, keeping a cash buffer for unexpected costs, vacancy, or a change in circumstances is the more resilient approach, and the lender will still assess whether you can service the additional repayments.
Will my self-employed income limit how much I can release?
It can, because the equity release still has to be serviced, and the income a lender recognises for a self-employed accountant depends on how the financials are read. Applying the right add-backs and choosing a lender that reads accountant income well can materially change the outcome, which is where matching your profile to the lender pays off.
What happens if property values fall after I draw on my equity?
Your available equity reduces, and in a significant downturn you could owe more than a property is worth, which limits your options until values recover. This is why leaving a buffer rather than drawing on every dollar of usable equity, and testing your budget against higher rates and vacancy, is the sensible way to manage the risk.
The Bottom Line
Using home equity is an efficient way for accountants to fund an investment property without saving a fresh deposit, and your professional standing can unlock more usable equity than a standard borrower would access. The real value, though, is realised or lost in the structure: keep the investment debt in a separate, clearly deductible split, avoid cross-collateralisation unless it serves a clear purpose, make sure you can comfortably service the new debt under the assessment buffer, and keep a reserve for when conditions turn. Confirm the finance structure with a broker and the tax treatment with your adviser, and the equity you have already built can do a great deal of the work of growing your portfolio.