Unlocking Cash from Your Home Loan: A Smart Guide for Property Owners
If you’re a property owner, you might be sitting on a hidden financial resource — your home equity.
Whether you’re looking to renovate your home, buy a car or caravan, or fund a wedding, — refinancing your property to access cash can be a game-changer.
The good news? There are two solid options to turn your equity into usable cash:
Refinance to a new lender – This could unlock lower interest rates, better loan features, and lower repayments, potentially putting more money back in your pocket.
Stay with your current lender – A loan top-up may be convenient, but it doesn’t always offer the best deal.
Let’s break down how each option works and why refinancing to a new lender can be a smart move, depending on your situation.
Option 1: Refinancing to a new lender
Switching lenders means taking out a brand-new mortgage to replace your existing one. While it requires a little more effort, it can come with lower rates, better loan features, and lower repayments — potentially saving you money in the long run.
How Much Equity Can You Access?
Lenders typically allow borrowing up to 80% of your home’s value. Here’s an example:
Home Value: $1,000,000
Current Mortgage: $600,000
Maximum Borrowing Limit: $800,000 (80% of $1,000,000)
Available Equity to Cash Out: $200,000
The Refinancing Process:
Initial Consultation
Speak to your mortgage broker to assess if refinancing is right for you.
Loan Comparison
Your broker will shop around for the best rates and loan features, ensuring you don’t miss out on a better deal elsewhere.
Loan Application Submission
Submit your application and supporting documents.
Request a discharge authority form from your current lender (some take 10+ days to process).
Property Valuation
Your new lender will arrange a valuation to confirm your home’s worth.
Credit Assessment
Lenders apply a stress test buffer to ensure you can afford repayments if rates rise. This buffer can be up to 3% above the current interest rate.
Loan Approval & Signing
Once approved, you’ll receive your mortgage documents to sign.
Settlement Day
Your new lender pays off your old mortgage and sets up the new one.
Equity funds are released into your bank account—enjoy that new car, dream wedding, or long-overdue renovation!
Post-Settlement Check
Your broker ensures your loan is set up correctly (e.g., linking offset accounts).
Why Refinancing to a new lender can be a smart move:
Lower interest rates – Save thousands over the life of your loan.
Better loan features – Access offset accounts, redraw facilities, and flexible repayment options.
Lower repayments – Free up cash for other investments or lifestyle needs.
Potential cashback offers – Some lenders offer sign-up incentives for switching.
More negotiating power – Banks compete for your business, giving you leverage to get the best deal.
What Will the Lender Want to Know?
Lenders assess your ability to repay and the purpose of the funds. You’ll need:
Proof of income (payslips, tax returns)
Property valuation
Details of your existing mortgage
Full financial statements (assets, liabilities, expenses)
Credit score
Loan purpose (e.g., home improvements, debt consolidation)
Costs to Consider When Refinancing:
Valuation Fees – To assess property value
Application Fees – Varies by lender
Discharge Fees – Your old lender charges this to close your mortgage
Break Costs – If you’re on a fixed-rate loan
Government Fees – Includes mortgage registration costs
How Will Refinancing Impact Your Loan?
Interest Rate – Likely to be lower, saving you money
Loan Type – You may switch from fixed to variable (or vice versa)
Loan Term – Could reset to 25–30 years
Repayments – Might move from monthly to fortnightly
Pro Tip: Even if refinancing lowers your repayments, make sure you’re not paying significantly more interest over time due to a longer loan term.
Option 2: Accessing Equity Without Changing Lenders
If you want to stay with your current lender, you’ll typically apply for a loan top-up or an increase to your existing loan. This is technically a refinance — but internally, with the same lender.
How It Works:
Contact Your Lender
Request a loan increase or top-up. Some banks allow this online, others require a phone call or in-person visit.
Complete a New Loan Application
Even though you’re staying put, you’ll still need to provide:
Updated income documents (e.g., payslips, tax returns)
Proof that you can afford the increased loan amount
A property valuation to confirm your home’s current worth
Property Valuation
The bank will order a valuation to determine how much equity is available.
Most lenders allow borrowing up to 80% of your property’s value without Lenders Mortgage Insurance (LMI).
Credit Assessment
The bank will check your credit score and assess your financial health.
Pro tip: Run your credit score with Experian or Equifax beforehand (free every 3 months). A score above 650 is ideal.
Approval & Fund Release
Once approved, you’ll sign a loan variation agreement.
Your lender increases your mortgage limit and releases the extra funds into your bank account.
Key Notes:
No break costs unless you’re on a fixed rate.
Potential fees: valuation or loan variation fees.
Loan term may not reset, but restructuring could create a new loan split.
Need Help? Let’s Talk!
Refinancing can put cash in your pocket, lower your repayments, and improve your loan terms — but getting the right structure is key.
If you’re considering tapping into your home equity, let’s chat. We can guide you through the process, compare your options, and help you get the best deal possible.
*This guide is for informational purposes only and should not be considered financial advice*
