Everything You Need to Know About Refinancing for Education

Refinancing to access equity means borrowing against the value your property has gained to pull out cash for a specific purpose. For Bayswater families, that often means funding education costs while keeping repayments manageable and avoiding higher-interest personal loans.

How Equity Release Works When You Refinance

You refinance your existing mortgage and increase the loan amount based on your property's current value. The difference between your old loan balance and the new loan is paid to you as cash. Lenders typically allow you to borrow up to 80% of your property's value without needing lender's mortgage insurance, though some will go higher if you're willing to pay the premium. Consider a buyer who purchased in Bayswater a decade ago for less than the current median and now has a property valued considerably higher. If they still owe $280,000 and the property is now worth $600,000, they could refinance up to $480,000 at 80% LVR, releasing $200,000 in cash. That amount could cover several years of private school fees or a full undergraduate degree without touching savings or taking out a separate education loan at a higher rate.

The cash you release gets added to your mortgage, so your repayments will increase. The trade-off is that you're borrowing at a mortgage rate rather than a personal loan rate, and you can spread the repayments over the remaining life of your loan or even extend the term if needed.

Why Bayswater Properties Work Well for Equity Release

Bayswater sits close to the Perth CBD and benefits from ongoing infrastructure upgrades, including the Morley-Ellenbrook rail line, which has supported steady property value growth in the area. Many homes in Bayswater are held by established families who bought before the area's recent growth phase, meaning they're sitting on significant equity even if they haven't paid down much of the loan balance. Lenders value properties in Bayswater favourably due to demand from both owner-occupiers and investors, which makes the refinance application process smoother and valuations more predictable.

If your property sits near Maylands or the Embleton precinct, you may also see stronger valuation results due to proximity to transport and schools, which directly affects how much equity you can access.

What Education Costs Can You Fund With Equity?

You can use released equity for any education-related expense. That includes private school fees, university tuition for local or interstate study, TAFE courses, overseas education, tutoring, laptops, textbooks, boarding costs, or even relocation expenses if your child is studying in another city. Lenders don't restrict how you use the funds once the refinance settles, but you'll need to show that the amount you're borrowing is reasonable relative to your income and the property value.

In our experience, families releasing equity for education often combine multiple costs into one drawdown rather than refinancing repeatedly. If you know your child has three years of university ahead, it makes sense to release enough equity upfront to cover the full period rather than refinancing again in two years when your circumstances or interest rates may have changed.

How the Refinance Process Works for Equity Release

You start with a property valuation to confirm your home's current value. Most lenders will organise this as part of the application, though some will accept a desktop valuation if your property type and location are straightforward. Once the value is confirmed, the lender calculates how much you can borrow based on your income, existing debts, and the loan-to-value ratio you're targeting. You'll need to provide payslips, tax returns if you're self-employed, and details of any other loans or credit commitments. The application process typically takes two to four weeks from submission to settlement, depending on the lender and whether any complications arise with the valuation or income assessment.

If your current lender offers a competitive rate and the features you need, you can refinance with them, which may speed up the process slightly. But if another lender offers a lower rate, an offset account, or more flexible repayment options, switching lenders during the refinance can save you money over the life of the loan. Running a loan health check before you refinance will show you what rates and features are available and whether your current loan is still working in your favour.

Fixed or Variable When Refinancing for Education

If you're refinancing to a higher loan amount, you need to decide whether to fix your rate, stay on a variable rate, or split between the two. A variable rate gives you flexibility to make extra repayments without penalty, which matters if you expect irregular income or want to pay down the increased loan balance faster. A fixed rate locks in your repayment amount for a set period, which can help with budgeting if you're managing school fees or university costs over several years and want certainty. Splitting the loan lets you fix part of the balance for stability and keep part variable for flexibility.

If you're coming off a fixed rate already and planning to refinance, that's often the ideal time to access equity as well, since you're moving lenders or products anyway and can avoid break costs.

How Borrowing Capacity Affects How Much You Can Access

Your borrowing capacity determines whether you can afford the increased loan repayments, and it's often the limiting factor rather than the equity itself. Lenders assess your income, existing debts, living expenses, and financial dependents to calculate how much you can comfortably repay each month. If you're refinancing to release a large amount of equity, the lender needs to be confident that you can service the higher loan amount without financial stress. In a scenario where a family has $250,000 in available equity but their income only supports an additional $80,000 in borrowing, the income cap will apply regardless of how much equity exists. You can check your borrowing capacity before applying to understand what's realistic for your situation and avoid applying for an amount the lender won't approve.

Offset Accounts and Redraw After You Refinance

Once you refinance and access equity, having an offset account or redraw facility can reduce the interest you pay on the increased loan balance. An offset account works like a transaction account linked to your mortgage. Any balance sitting in the offset reduces the amount of interest charged on your loan, so if you have $20,000 in offset and a $500,000 loan, you only pay interest on $480,000. A redraw facility lets you make extra repayments on your loan and pull that money back out if you need it later, though some lenders restrict how often you can redraw or charge fees for doing so. If you're refinancing to access equity, switching to a loan with a full offset account rather than limited redraw can give you more control over your cash flow and reduce interest costs over time.

How Long It Takes and What to Expect

From the time you decide to refinance to the time the cash lands in your account, expect four to six weeks in most cases. The lender will order a valuation within the first week, assess your income and expenses over the next week or two, issue formal approval, and then move to settlement. Once settlement occurs, the lender pays out your old loan, and the remaining funds are transferred to your nominated account. You'll need to keep making repayments on your existing loan until settlement occurs, so don't assume the new loan has taken over until you receive confirmation. If you're coordinating the equity release with a school fee payment deadline or university enrolment date, factor in the full timeline and start the refinance process at least two months ahead of when you need the funds.

When Refinancing for Equity Doesn't Make Sense

If your property value hasn't increased much since you purchased or if you've already borrowed close to 80% of the property's value, you may not have enough equity to make refinancing worthwhile. Similarly, if your income has dropped or your expenses have increased significantly, your borrowing capacity may not support a higher loan amount even if the equity exists. In those cases, a personal loan or education-specific loan may be a more realistic option, though the interest rate will be higher. If your current mortgage has a low rate and you're only one or two years into a fixed period, the break costs to exit early and refinance could outweigh the benefit of accessing equity, particularly if you only need a small amount. You'd need to compare the cost of breaking your fixed rate against the benefit of refinancing to a potentially lower rate while releasing equity at the same time.

Call one of our team or book an appointment at a time that works for you, and we'll walk through your property value, current loan structure, and income to show you exactly how much equity you can access and what your repayments would look like if you refinanced.

Frequently Asked Questions