9 Smart Ways to Leverage Your Home Equity

Your home equity can be a powerful financial asset, but using it wisely is key. Should you upgrade to a new home, invest in property, or renovate your current space? We asked Dr Michael Baumann, CBA’s Executive General Manager Home Buying, to share his insights on how to strategically leverage your home equity.

1. Work Out How Much Equity You Have

Your equity is the difference between your property’s current market value and your remaining mortgage balance. Start by getting an updated valuation from your lender—CommBank offers fast property valuations to give you a clear picture of your financial position.

“Many homeowners don’t fully understand the equity they hold or how it could help them achieve property goals,” says Dr Baumann. “Knowing this figure is the first step toward using it effectively.”

2. Understand How Much Equity You Can Access

Most lenders will allow you to borrow up to 80% of your home’s current value, minus your mortgage balance. For example, if your home is worth $750,000 and you owe $400,000, you may be able to access up to $280,000.

“It’s crucial to know how much you can realistically use and to factor in any extra costs,” advises Dr Baumann. “We help customers balance their goals without overextending themselves.”

3. Set Your Goal: Upgrade or Invest?

Decide whether you want to upgrade, renovate, or invest in a rental property. Upgrading is ideal for more space or a better location, while investing can build long-term wealth.

“If improving your lifestyle is the priority, upgrading or renovating could be the right choice,” says Dr Baumann. “If wealth-building is your aim, an investment property may be the way forward.”

4. Use Equity to Buy Your Next Home

When upgrading, clarify what matters most—space, location, or specific features. “Equity allows you to make changes without starting over financially,” explains Dr Baumann.

5. Invest in Property With Your Equity

You can use equity as a deposit for an investment property. This is especially effective in markets with strong rental demand and growth potential. However, Dr Baumann warns, “Do your homework on location, rental yield, and ongoing costs before committing.”

6. Calculate the Costs of Switching Properties

Upgrading or buying a new property involves costs such as stamp duty, legal fees, and moving expenses. “Factor these into your budget early,” says Dr Baumann. CommBank’s calculators and lender network can help you plan.

7. Get Pre-Approved for a Loan

Pre-approval clarifies your spending limit and strengthens your buying position. CommBank offers fast pre-approvals online or through a lender. “Pre-approvals remove uncertainty and make you a more competitive buyer,” notes Dr Baumann.

8. Choose the Right Home Loan Features

Look for features like offset accounts to manage repayments and save on interest. “With CommBank, you can link up to 99 offset accounts to your loan, helping you manage money while paying off your home sooner,” says Dr Baumann.

9. Seek Guidance From Lending Specialists

If you’re unsure how much equity you can use or how to proceed, speak with a lender. “Our specialists offer local insights and tailored advice, ensuring you make informed decisions,” says Dr Baumann.

Whether you plan to upgrade, renovate, or invest, knowing how to leverage your home equity effectively can open doors to new opportunities—while keeping your financial health in check.

READ: How Generational Trends Are Shaping Housing Purchases in 2025