How to Use Your Home’s Equity to Buy an Investment Property

Did you know you can buy an investment property without using cash?

It’s called equity leverage – and it’s one of the most common ways New Zealand homeowners build wealth through property.

What Is Equity?

Equity is simply the difference between what your home is worth and what you still owe the bank.

For example, if your home is worth $1 million and your current mortgage is $600,000, you have $400,000 in equity.

But that doesn’t mean you can use all of it – most banks require you to keep at least 20% of your home’s value untouched as security. 

In this case, that’s $200,000 locked in, leaving around $200,000 available to leverage.

How It Works When Buying an Investment Property

If you’re looking to purchase an investment property, the required deposit depends on whether it’s a new build or an existing home:

• New Build: Most banks require only a 10% deposit. On a $700,000 property, that’s around $70,000.
• Existing Property: You’ll need a little bit more, usually a 30% deposit – about $210,000 on that same $700,000 property.

Instead of paying that deposit in cash, your bank can secure it against the equity in your current home. The remainder becomes your new mortgage on the investment property.

For example:

• Deposit on a new build: $70,000 (secured against the equity leveraged from your existing property)
• New mortgage: $630,000

In other words, you’re using the value you’ve already built up – not dipping into your savings.

Why It Works

Leveraging equity allows you to grow your property portfolio faster, without having to save a large cash deposit each time.

It’s a proven strategy used by many Kiwi investors, but it does mean taking on additional lending – so it’s important to be confident about your ability to meet the repayments.

Used wisely, equity leverage can be a powerful way to turn your home ownership into long-term wealth creation.

Ready to See What’s Possible?

At The Mortgage Hub, we can calculate how much usable equity you have and help you structure your lending to make your next move smarter and more sustainable.

Our advice is always free – so get in touch today and let’s see how your home could help you take the next step in your investment journey.

Learn how equity leverage works – watch the video with our Director, Mils Muliaina.