In a growing market, you may want to use the equity you have in your home to buy an investment property.
Equity is the remaining value of your property once you subtract what you still owe the bank.
You may have enough equity to use as a deposit on a new property without having to put cash down. Your existing home then becomes a security on the new debt.
If you go ahead, the bank will have your home valued. They may be happy to lend against 80% of your home’s value, to be safe. This is called your ‘useable equity’.
You can use that as a deposit on an investment property, remembering you’ll also need to cover upfront costs like stamp duty and legal fees.
And don’t get carried away. You should avoid using all your equity for the purchase and maintain a buffer for a rainy day.