Top tips to use equity in your Kooyong home

If you own property in Kooyong, you likely have equity sitting in that home.

The question isn't whether you can access it. The question is whether releasing it now positions you for the second purchase you want, without overextending on the property you already own.

How refinancing releases equity from your current property

Refinancing to release equity means increasing your loan amount and withdrawing the difference as cash. Lenders allow you to borrow up to 80% of your property's current value without needing to pay lenders mortgage insurance, though some will go higher if you're prepared to wear that cost.

Consider a buyer who purchased in Kooyong several years ago for $1.4 million with a loan of $1.1 million. Their home is now valued at $1.8 million, and they've reduced the loan to $950,000. At 80% LVR, they can borrow up to $1.44 million. That leaves $490,000 in available equity after accounting for the existing loan. After refinance costs and a buffer for the second purchase, they have around $470,000 to use as a deposit and cover stamp duty and associated costs on their next property. The lender will assess whether they can service both loans simultaneously, which is where borrowing capacity becomes the deciding factor.

The equity is only useful if the numbers allow you to hold both properties comfortably.

What lenders assess when you refinance for a second property

Lenders assess your ability to service both the refinanced loan on your Kooyong home and the new loan on the second property. They look at your income, existing liabilities, living expenses, and the rental income you expect from either property if you're planning to lease one out.

If you're keeping your Kooyong home as your principal place of residence and buying an investment property, the lender will include only a portion of the projected rental income, usually around 80%. If you're moving out of Kooyong and renting it while you occupy the second property, they'll treat that rental income the same way. Either scenario requires proof that your income can cover both loan repayments, rates, insurance, and maintenance on both properties, even if one tenant falls through.

Serviceability is the constraint most buyers don't see coming until they're already committed to the refinance.

Kooyong's property values and what that means for equity

Kooyong sits in Stonnington, one of Melbourne's more established inner-east municipalities. The area is known for larger blocks, period homes, and proximity to both Glenferrie Road and the eastern suburbs' private school corridor. Properties here tend to hold value, and many homeowners have seen significant equity growth over the past decade.

That equity position makes Kooyong homeowners strong candidates for refinancing to fund a second property, but it also means the refinanced loan will be substantial. A higher loan means higher repayments, and lenders will assess whether your income justifies both. If you're refinancing a $1.5 million loan to access equity, your serviceability needs to support that before the second property is even factored in.

The equity is there, but the question is whether your income allows you to use it.

Cross-collateralisation and whether you should link both properties

Some lenders will offer to use your Kooyong property as security for the second purchase, linking both properties under a single loan structure. This is called cross-collateralisation, and while it can make approval easier, it ties both properties together. If you want to sell one later, you'll need the lender's approval to release it from the loan, which can complicate your plans.

Keeping the loans separate gives you more control. You can sell or refinance either property without affecting the other, and you can negotiate with different lenders if one offers a more suitable rate or structure for your circumstances. The downside is that lenders may require slightly more equity or stronger serviceability when the loans are split, because they can't rely on both properties as combined security.

In our experience, most buyers prefer to keep the loans separate unless their serviceability is tight and linking the properties is the only way to get approval.

Costs involved in refinancing to release equity

Refinancing comes with costs that reduce the amount of equity you can actually use. Discharge fees from your current lender typically sit between $300 and $500. Your new lender may charge an application fee, and if you're borrowing above 80% LVR, lenders mortgage insurance will apply. A valuation will cost between $200 and $600 depending on the property. If you're using a solicitor or conveyancer to handle the refinance documentation, expect another $800 to $1,500.

These costs don't eliminate the benefit of releasing equity, but they do need to be factored into your total borrowing. If you're accessing $400,000 in equity and spending $5,000 in refinance costs, your net position is $395,000. That difference can matter when you're calculating your deposit and stamp duty for the second property.

Refinance costs aren't always obvious until settlement, so build them into your budget early.

Timing the refinance and the second purchase

You don't need to settle the refinance and the second purchase on the same day, but the sequence matters. Most buyers refinance first, access the equity, and then use those funds to secure the second property. This gives you certainty over how much you have to spend before you start making offers.

If you've already signed a contract on the second property, you can still refinance to release equity in time for settlement, but the timeline becomes tighter. Refinancing typically takes three to five weeks from application to settlement, depending on the lender and whether the valuation or documentation introduces delays. If your second property settles in six weeks, you'll need to move quickly.

Some buyers prefer to arrange pre-approval for the refinance and the second purchase simultaneously, so they know both loans are approved before they commit to either.

What happens if you can't access enough equity

If your equity position or serviceability doesn't support the second purchase outright, there are a few options. You can release a smaller amount of equity and increase your deposit savings to make up the difference. You can look at a lower-priced second property that fits within your borrowing capacity. You can bring in a co-borrower, such as a partner or family member, to strengthen your serviceability. Or you can wait, pay down more of your Kooyong loan, or increase your income before refinancing.

None of these options are ideal if you were ready to buy now, but they're all more practical than overstretching and finding yourself unable to service both loans if circumstances change. A mortgage broker can model different scenarios and show you what's achievable based on your current position versus what might be possible in six or twelve months.

The goal is to use your equity in a way that doesn't limit your options later.

How a mortgage broker structures the refinance

A mortgage broker will assess your equity, model your serviceability across both properties, and recommend a loan structure that aligns with your plans. That might mean refinancing with your current lender if they offer competitive rates and a straightforward approval process, or switching to a new lender if they provide more suitable terms or higher borrowing capacity. The broker will also advise on whether to keep the loans separate or link them, and how to time the refinance and second purchase so both settle smoothly.

Brokers also have access to lenders who assess serviceability differently, which can make a material difference if your income is variable or if you're relying on rental income from one of the properties. If one lender won't approve the full amount you need, a broker can find another who will, without you needing to apply multiple times and risk multiple credit enquiries.

The value is in having someone structure the refinance properly from the start, rather than discovering halfway through that the numbers don't support what you're trying to do.

Call one of our team or book an appointment at a time that works for you.

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