How do you use home equity to buy an investment property in WA?

Short answer: you use home equity to buy an investment property by borrowing against the value you already own. Perth’s median house price has reached $950,000 on REIWA’s data to July 2026. A lot of WA owners are sitting on more usable equity than they realise. The general rule is 80 per cent of your home’s value, less what you still owe. Some lenders release more, depending on your circumstances. That difference funds the deposit and costs on the investment property. A second loan secured on the new property funds the rest. The equity is the deposit you did not have to save. The rest of this guide is the maths, the structure, and the 2026 changes that decide whether it works.

How much home equity can you actually use?

Reading the table

The home value in the table is the REIWA Perth median for the year to July 2026. A bank valuation is what counts, not a portal estimate. The right-hand column is what equity allows at 80 per cent. Some lenders go higher depending on your circumstances. Income is the other test. Every dollar of equity you borrow is a dollar of debt. Banks assess it at your rate plus APRA’s 3 percentage point buffer (unchanged as at November 2025), on top of the investment loan itself. Non-bank lenders set their own assessment rates, which is one of the options on the table. In a year when the cash rate has risen three times, that buffer is doing more work than the valuation is.

Two more things the table hides. An owner who bought in Perth five years ago has seen the value move a long way. That is exactly who this guide is for. And a valuation is a moment in time. If you plan to use home equity to buy an investment property, get the valuation done early.

How does a lender use home equity to buy an investment property for you?

Four structures compared

Why the tax column matters more than it looks

The ATO’s rule is about purpose, not security. Interest is deductible when the borrowed money is used to buy a property that earns rent. The ATO’s own examples make the point twice. In one, a borrower redraws $140,000 from her home loan to pay the deposit on a $700,000 rental. She can claim the interest on the whole investment borrowing, because the redraw was used for the rental. In another, a couple borrow $400,000 against their old home to buy a new one to live in. They can claim nothing on that $400,000, even though it is secured on the property they rent out. Same security, opposite answers, because the purpose was different.

That is why the split loan wins. One account, one purpose, one clean line in your tax return every year for as long as you hold the property. Mix a private purchase into the same account and the ATO requires apportionment of every repayment for the life of the loan. The split makes the accountant’s job simple every year you hold the property.

Equity is the deposit you did not have to save. The structure keeps it that way at tax time.

What changed for property investors in 2026?

Rates and lending

The Reserve Bank left the cash rate at 4.35 per cent on 11 August 2026 after three increases this year. It said housing prices were falling in some capitals and new housing loans had declined noticeably. It did not rule out a further increase. For an investor using home equity, that lands in one place: the assessment rate. Banks test both loans at the actual rate plus APRA’s 3 percentage point buffer (November 2025); non-bank lenders sit outside that rule and assess differently. The equity may be there. The capacity is the question, and the answer depends on which lender is asked.

APRA added a second guardrail from 1 February 2026. Banks may write no more than 20 per cent of new lending to borrowers whose total debt is six times income or more. The cap is measured separately for owner-occupiers and investors. APRA said plainly that investors typically borrow at higher ratios and would feel it more. Two things follow. A home loan plus an investment loan on one income can reach six times quickly, so the lender you choose matters. And loans for new dwellings are excluded from the cap. That is the first of several reasons new builds keep coming up in 2026.

Negative gearing and capital gains

The ATO confirmed on 29 June 2026 that the Budget measures are now law. From 1 July 2027, rental losses on established residential property bought after 7:30pm AEST on 12 May 2026 can no longer be deducted against wages or other income. They carry forward against rental income and property gains instead. New builds keep negative gearing. From the same date the 50 per cent CGT discount is replaced by cost base indexation with a 30 per cent minimum tax rate. It applies only to gains after 1 July 2027. New builds can choose either method.

Read that as a WA investor and the picture is clearer than the headlines. If you buy an established property this year, you still negatively gear it until 30 June 2027. After that, a property that is cash-flow positive or close to it barely notices the change. With Perth house rents at a median of $750 a week on REIWA’s data to July 2026, more established stock is closer to neutral than it was. If you want the old rules for the long haul, build or buy new. Negative gearing stays, the CGT discount stays as an option, and the APRA cap does not apply. That decision belongs to you and your accountant. Our job is to make the equity and the lending fit whichever way you go.

Can you use home equity to buy an investment property in regional WA?

Perth equity, regional purchase

Two of the three questions we get on this topic name a place. Equity in a Perth home to buy in Bunbury, or Perth equity to buy somewhere regional. The good news is that the equity release does not care where the investment property is. The home is the security for that split, and the home is in Perth. What changes is the second loan. Some lenders reduce the maximum loan-to-value ratio on regional postcodes. Some want a full valuation rather than a desktop one. A few cap loan size in smaller towns. Our guide to postcode restrictions on home loans in WA mining towns covers the north. The South West centres sit closer to Perth policy than to Pilbara policy.

Regional WA is also one of the few markets in the country still recording growth as the capitals soften. That is not a recommendation to buy there. It is a reason the question is being asked. It is also why the lender conversation happens before the property search, not after. Already living in the regions and weighing Perth as the investment instead? Our guide on buying a house in Perth while working in the Pilbara runs the other way round.

What does it cost to use home equity to buy an investment property in WA?

Transfer duty is usually the largest single cost and it comes out of the equity. That is why the table above allowed roughly 5 per cent of the price for duty and costs. Land tax is the cost investors forget. Your own home is exempt, an investment property is not. WA assesses the aggregated unimproved value of all your taxable land above a threshold each 30 June. On a single Perth or regional investment it is often modest. On a second or third it is a line in the budget.

Lenders mortgage insurance is a cost you can often design out. Keep the equity release to 80 per cent of the home’s value and the investment loan to 80 per cent of the purchase price, and there is commonly no LMI on either loan. Where a lender releases more than 80 per cent, terms differ from lender to lender. We compare them before you decide.

What are the steps to use home equity to buy an investment property?

Seven steps

1. Get a bank valuation on your home. Not a portal estimate. The valuation sets usable equity at 80 per cent, and it is the number every other step depends on.
2. Run the capacity test with both loans in it. Existing home loan, the new split, and the investment loan, all at the assessment rate. Rent on the new property counts, at a shading that varies by lender. If the number is tight, lender choice, structure or timing usually moves it.
3. Choose the structure with your accountant in the room. Split loan plus standalone investment loan is the default. Redraw and lines of credit have their place, but they need the purpose of every dollar documented from day one.
4. Decide new or established, with 1 July 2027 in view. New keeps negative gearing and sits outside the APRA cap. Established still gears until mid-2027 and suits a property that is near cash-flow neutral. This is a tax decision first and a lending decision second.
5. Check the postcode before you fall for the house. Send us the suburb, or the listing, and we tell you which lenders go to what LVR there.
6. Get pre-approved on both loans. The equity release settles first or alongside; the investment loan follows the contract. A pre-approval on both lets you sign with confidence.
7. Call us before any of it. We compare the options across the panel and give a solid recommendation based on your circumstances. Most equity files are two conversations and a valuation from start to pre-approval.

Choosing who runs it

The difference between a good and an ordinary equity file is almost entirely in the structure and the lender choice. Neither is visible on a comparison site. Our list of questions to ask a mortgage broker in WA applies here with one addition. Ask how they would structure the deposit release, and why. If the answer is “we’ll just top up your home loan”, ask about the tax column in the table above. If the answer is a split, a standalone investment loan and a call to your accountant, you have found the right person. That is how to use home equity to buy an investment property.