You've Built Up Equity in Your Home. Now What?

If you've been sitting on equity and wondering what to do with it, you're not alone. Here's how to think about it, and why getting the structure right matters more than the amount.

At this time of year, we tend to notice a shift in the conversations we're having and the questions get more specific.

• "We've been talking about renovating the kitchen."
• "We'd love to help the kids get into the property market."
• "We know there's equity sitting in the house. We just haven't done anything with it."
• "We want to start investing, but we're not sure where to begin."

If any of those sound familiar, you're in good company. And the instinct behind them is sound. If you've been paying down your mortgage and your property has grown in value, you may have more financial flexibility than you realise.

What equity actually gives you

Home equity is the difference between what your property is worth and what you still owe on it. And while it's not cash in your hand, it can be a powerful tool when used with intention.

Depending on your situation, equity can be used to fund a renovation that adds value to your home, help a family member with a property deposit, support an investment strategy (whether that's property, shares, or something else entirely), or provide a financial buffer without disrupting the way your household cash flow already works.

The key word there is can. Because what equity makes possible and what's actually right for your situation aren't always the same thing.

Why structure matters more than access

This is the part that often gets overlooked.

Accessing equity is relatively straightforward. A broker or lender can usually tell you what's available. But how it's set up, the loan structure, the account splits, the purpose of each drawdown, is where the real value sits.

Get the structure right, and you may be able to maintain tax deductibility on investment-related borrowings, keep your existing mortgage arrangements intact, avoid cross-collateralising properties unnecessarily (which can limit your flexibility later), and draw on funds in a way that aligns with your broader financial plan rather than working against it.

Get it wrong, and you can end up with a messier balance sheet, reduced borrowing power down the track, or a tax position that costs you more than it should.

This is especially worth thinking about right now. With the RBA raising the cash rate to 3.85% in February and economists flagging the possibility of a further increase in May, any new borrowing needs to be stress-tested against higher repayments, not just today's numbers.

The conversation worth having

If you've been thinking about using your equity, even loosely, the best time to explore it is before you've committed to anything. Not after you've signed a building contract or promised the kids a number.

An early conversation means we can look at your full picture: what you owe, what you own, what your cash flow looks like, what your goals are over the next few years, and how any equity release fits within that. Because your mortgage doesn't exist in isolation. It sits alongside your tax position, your super, your business (if you have one), and your longer-term plans.

That's the advantage of working with Ledgersmith. Your accountant, financial adviser, and broker are all under the one roof.

The bottom line

Equity isn't a windfall. It's borrowed money, and it needs to be treated that way. But when it's used deliberately, structured properly, and aligned with a plan, it can unlock options that would otherwise sit on the table untouched.

If any of this has sparked a thought, even a vague one, that's enough to start with. Reach out for an obligation free chat and we'll take it from there.

Loren Marsh - Mortgage Specialist
M: 0437 460 035
E: loren.marsh@ledgersmith.com.au