16 May 2026 Using Equity To Buy Second Property in South East Melbourne, The 2026 Guide

South East Melbourne homeowners are sitting on substantial equity that many haven’t yet considered using. If you own property in suburbs like Glen Iris – Bentleigh or Cheltenham, the equity in your home could be the key to building a property portfolio without waiting years to save another deposit.

Using equity to buy a second property means borrowing against your existing home to fund the deposit and costs of an investment purchase. With house prices across South East Melbourne ranging from $1.29M in Cheltenham to $5.8M in Toorak, established homeowners often have hundreds of thousands in accessible equity – potentially enough to fund multiple investment purchases.

EverLend helps South East Melbourne property owners understand their equity position and compare investment loan options across 60+ lenders, completely free of charge.

Here’s what you need to know about using your home equity to build your property portfolio in South East Melbourne.

How much equity do you actually have available?

Your usable equity depends on three factors: your property’s current value, your outstanding mortgage, and how much lenders will let you borrow against the total. Most lenders cap your combined borrowing at 80% of your home’s value, which means you need 20% equity to remain plus the amount you want to access for investment.

The calculation works like this: if your home is worth $2M and you owe $800,000, your total equity is $1.2M. At 80% LVR, lenders will let you borrow up to $1.6M total, leaving you with $800,000 in accessible equity for investment purposes. That’s enough for a substantial deposit on a second property – or potentially funding two smaller investment purchases across different South East Melbourne suburbs.

Can you use equity instead of cash for an investment property deposit?

Yes – using equity as your investment deposit is one of the most common strategies for building a property portfolio. Instead of saving cash for years, you borrow against your existing property to fund the deposit, stamp duty, and purchase costs of your investment property.

This typically works through either refinancing your existing loan to access equity, or setting up a separate line of credit secured against your home. The right structure depends on your tax situation and long-term strategy, which is exactly what we work through with you before you commit.

What rules apply when you use equity to invest in property?

• ›No first home buyer schemes: using equity to invest means you’re no longer eligible for the First Home Guarantee, Help to Buy, or Victorian FHOG on future owner-occupier purchases.
• ›APRA serviceability buffer: lenders assess your total borrowing against all properties at your actual rate plus a 3.0% buffer, so your income needs to cover both loans at an assessment rate of approximately 9%.
• ›Foreign buyer restrictions: overseas buyers cannot purchase established residential property from 1 April 2025 to 30 June 2029. New builds with FIRB approval remain available.
• ›VIC foreign purchaser duty: an 8% surcharge applies to foreign buyers on top of standard land transfer duty.
• ›Capital gains implications: investment properties are subject to capital gains tax when sold, unlike your primary residence which carries a CGT exemption.

How do mortgage brokers help with equity investment loans in South East Melbourne?

Step 1: Talk to us

Get in touch and we’ll assess your current property value, outstanding debt, and borrowing capacity across our 60+ lender panel to determine how much equity you can access.

Step 2: Structure your lending correctly

We design the loan structure that suits your tax position and investment goals. This might mean refinancing your existing loan, setting up a separate investment facility, or using a line of credit depending on your situation.

Step 3: Compare investment loan rates

We compare investment loan rates across banks and specialist lenders. Competitive investment variable rates start from approximately 5.90% p.a., but the best rate depends on your LVR, loan size, and lender choice.

Step 4: Get pre-approval before you buy

We secure pre-approval for both the equity release and the new investment loan, so you know exactly what you can spend before you start looking at properties.

Step 5: Coordinate both settlements

We work with your solicitor to ensure the equity funds are available when you need them for settlement on your investment property.

Step 6: Review and optimise ongoing

We monitor your portfolio and suggest refinancing opportunities as your equity position grows or when better rates become available.

What mistakes do South East Melbourne investors make with equity?

The most common mistake is not understanding that using equity to invest changes your risk profile permanently. You’re now servicing debt on two properties, which means your cashflow needs to cover both loans even if one property sits vacant. Many investors underestimate the holding costs and vacancy periods, particularly in markets where rental demand varies seasonally.

Another mistake is choosing the wrong loan structure upfront. Some homeowners refinance their entire existing loan to access equity, which can lose them a competitive rate they’ve been paying for years. Others set up interest-only loans without understanding that the principal still needs to be repaid eventually. The right structure depends on your tax situation and long-term goals, which is exactly why lender choice and broker guidance matter so much in this space.

Which South East Melbourne suburbs offer the strongest equity growth potential?

Based on 12-month growth figures to April 2026, several South East Melbourne suburbs are showing strong momentum for equity investors. Glen Huntly has recorded house growth of +17.10%, though this reflects a limited number of transactions and should be treated with care. More representative suburbs include Bentleigh (+7.38%), Glen Iris (+6.05%), and Cheltenham (+5.75%).

For established homeowners using equity to invest, affordability often matters as much as growth potential. Suburbs like Cheltenham ($1,287,000 median) and Moorabbin ($1,292,500 median) offer entry points that don’t require massive equity drawdown, leaving room for future portfolio expansion. The strongest strategy is often buying within your existing knowledge area – if you live in the inner south east and understand those markets, use your equity to invest in nearby suburbs where you can assess properties and rental demand firsthand.

Source: CoreLogic, data to April 2026.

Frequently Asked Questions

How much equity can I access from my home to buy an investment property?

Most lenders allow you to borrow up to 80% of your property value across all loans. Your accessible equity is the difference between that limit and your current outstanding debt.

Do I need to refinance my existing loan to access equity for investment?

Not necessarily. You can access equity through refinancing your current loan or by setting up a separate line of credit secured against your property. The best structure depends on your current rate and loan terms.

What deposit do I need when using equity to buy an investment property?

Investment loans typically require a 20% deposit to avoid LMI. If you’re using equity rather than cash, you still need the equivalent 20% – it’s just borrowed against your existing property instead of coming from savings.

Can I claim interest on equity loans as a tax deduction?

Generally yes, if the borrowed equity is used to generate rental income. The ATO allows deductions for interest on loans used for investment purposes, but speak to your accountant about your specific situation.

What happens to my equity loan repayments if my investment property sits vacant?

You’re responsible for both loan repayments regardless of rental income. Budget for vacancy periods and ensure your primary income can service both loans if needed.

Should I use a mortgage broker or go direct to my bank for equity investment loans?

A mortgage broker, every time. Investment loan structures are complex, and different lenders assess equity and serviceability very differently. We compare 60+ options to find the combination that maximises your borrowing capacity and minimises your costs.

What’s the difference between interest-only and principal-and-interest for equity investment loans?

Interest-only repayments are lower initially and may offer tax benefits, but the principal still needs to be repaid eventually. Most investors start with interest-only and convert to principal-and-interest later, but the right choice depends on your cashflow and long-term strategy.

Your Next Steps

Using your home equity to build a property portfolio can accelerate your wealth significantly, but getting the loan structure right from the start determines your long-term flexibility and tax position. The difference between lenders in how they assess your serviceability across multiple properties can affect your borrowing capacity by tens of thousands – particularly important when you’re looking at South East Melbourne properties where investment entry points still require substantial equity drawdown.

The right lender for equity investment loans depends on your situation, and that’s a conversation worth having. Talk to the EverLend team or call 03 7036 3356, and we’ll compare your options across 60+ lenders at no cost to you.

About the author Evelyn Clark Director, Mortgage & Finance Broker, EverLend Evelyn Clark is the Director and Mortgage & Finance Broker at EverLend, a South East Melbourne brokerage. Specialising in home finance, she helps first home buyers, upgraders and investors across South East Melbourne. Operating under Ever Lend Pty Ltd (ACN 625 080 515), authorised under LM Broker Services Pty Ltd (Australian Credit Licence 517192), Evelyn Clark compares loans across a panel of 60+ lenders at no cost to the borrower. Meet the team →Book a Free call →

EverLend · St Kilda and South East Melbourne · General information only – this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions. · Last updated 16 July 2026