Home Equity Loan – Buy Another House Faster (2026)

Are you eyeing that perfect investment property or planning to upsize your family home, but wondering how to finance it? If you’ve built up equity in your current home, a home equity loan could be the solution to your real estate ambitions. With the ever-evolving Australian property market, understanding your options is crucial for making informed financial decisions.

Understanding Home Equity Loans

Home equity is the difference between your property’s current market value and the balance of your mortgage. For instance, if your home is valued at $800,000 and you owe $400,000, your equity is $400,000. A home equity loan allows you to borrow against this equity to fund other significant purchases, such as buying another house.

Essentially, this type of loan can be a second mortgage or a line of credit (often referred to as a HELOC - Home Equity Line of Credit). Both options allow you to leverage your existing home’s value to access additional funds. However, it’s important to ensure you can manage the repayments, as defaulting could put your current home at risk.

Current Market Rates and Requirements

As of 2026, interest rates for home equity loans typically range from 6.49% to 12%, depending on the lender and your financial situation. The amount you can borrow is generally up to 80% of your available equity, but this can vary based on the lender’s policies.

Eligibility criteria often include:

• A minimum of 20% equity in your home
• Good credit score
• Stable income and employment history
• Proof of ability to repay the loan

At Esteb and Co, with access to over 83 lenders, we can help you find the most favourable terms tailored to your unique situation.

How to Use a Home Equity Loan to Buy Another House

Here’s a step-by-step guide to using a home equity loan to purchase another property:

1. Assess Your Equity: Contact your lender or a property appraiser to determine your home’s current market value and calculate your available equity.
2. Check Your Credit Score: Ensure your credit score is in a healthy range, typically above 650, to qualify for competitive interest rates.
3. Explore Lender Options: Research and compare offers from various lenders. Esteb and Co can assist in presenting options from our extensive panel of 83+ lenders.
4. Get Pre-Approved: Obtain pre-approval to understand how much you can borrow and at what rate, helping you plan your property purchase.
5. Find Your Property: Work with a real estate agent to locate a property within your budget and financial capability.
6. Finalise the Loan: Once you’ve selected a property, work with your lender to finalise the home equity loan, ensuring all paperwork is in order.
7. Close the Deal: Use the funds from your home equity loan to complete the purchase of your new property.

Tips and Considerations

Before proceeding with a home equity loan, consider the following:

• Interest Rate Fluctuations: Be aware that interest rates can change, affecting your monthly repayments. Consider fixed-rate options to mitigate this risk.
• Impact on Current Mortgage: Understand how taking out additional debt could affect your existing mortgage and overall financial health.
• Long-Term Financial Goals: Ensure that buying another property aligns with your long-term financial objectives and does not stretch your budget too thin.
• Consult Professionals: Engage with financial advisors and mortgage brokers to gain insights and make informed decisions. Esteb and Co’s experts are always ready to assist in navigating complex lender requirements.

Frequently Asked Questions

• Can I use a home equity loan for an investment property? Yes, many Australians use home equity loans to fund investment properties. Ensure that you assess the potential return on investment and risks involved.
• How quickly can I access funds from a home equity loan? The process can take several weeks as it involves property valuation, credit checks, and lender approval. Plan accordingly to avoid delays in your property purchase.
• What are the risks of using a home equity loan? The primary risk is defaulting on repayments, which could lead to losing your home. Careful financial planning and budgeting are essential.
• Is a home equity loan better than refinancing? It depends on your circumstances. A home equity loan may be suitable for smaller amounts, whereas refinancing could be beneficial for accessing larger funds at potentially lower rates.
• Can I still sell my home if I have a home equity loan? Yes, but the home equity loan must be paid off upon the sale of the property, which will be deducted from the sale proceeds.
• How does a HELOC differ from a home equity loan? A HELOC is a revolving line of credit that allows you to borrow as needed, while a home equity loan provides a lump sum upfront with fixed repayments.
• What are the tax implications of a home equity loan? Tax implications can vary, so it’s advisable to consult with a tax professional to understand how it affects your individual situation.

By leveraging your home equity wisely, you can expand your property portfolio, achieve your financial goals, and build long-term wealth. Whether you’re buying a second home or an investment property, Esteb and Co’s experienced brokers are here to guide you every step of the way.