What Are the Options for Refinancing to Access Equity?

Refinancing to access equity for your business means increasing your home loan to release cash tied up in your property's value.

The amount you can access depends on your property's current value, how much you owe, and how much a lender will allow you to borrow against it. Most lenders cap this at 80% of the property's value without requiring lenders mortgage insurance, though some will go higher if you're willing to pay the premium. The funds are released at settlement and can be used for anything from purchasing equipment to covering payroll gaps or investing in stock.

How Equity Release Works When You Refinance

You borrow more than you currently owe, and the difference is paid to you as cash. If your property is worth $600,000 and you owe $300,000, refinancing to 80% of the property's value would give you a loan of $480,000. That leaves $180,000 in equity, and after paying out your existing loan, you'd have $180,000 available to access. Lenders will want to know what the funds are for, and if it's for business purposes, they'll assess your ability to service the higher loan amount based on both your personal income and the performance of your business.

Consider a buyer who runs a landscaping business in Morley and needs $80,000 to purchase a second truck and equipment. Their home is valued at $550,000, they owe $280,000, and they refinance to $450,000. The $80,000 is released at settlement, the truck is purchased, and the business scales up to take on commercial contracts. The loan is now larger, but the repayments are still manageable because the additional income from the expanded business covers the increase. This is how refinancing to release equity can directly fund growth without needing to sell assets or take on unsecured debt at higher rates.

What Lenders Assess When Equity Is Used for Business

Lenders treat equity accessed for business purposes differently to equity used for personal reasons. They will review your business financials, including profit and loss statements, tax returns, and sometimes a letter from your accountant. If your business is less than two years old, some lenders will decline the application outright. Others will ask for evidence of contracts, invoices, or forward bookings to show that the business can support the additional debt. Your personal income is also factored in, and if you're a sole trader or director, the lender may combine both to assess serviceability.

The loan structure matters too. Some borrowers split the loan so that the portion used for business is interest-only, which reduces the monthly repayment and improves cashflow. This works particularly well if the business generates income that can be used to pay down the loan over time, or if the borrowed amount is expected to produce a return that exceeds the interest cost.

Property Valuation and How It Affects the Amount You Can Access

The amount of equity you can release depends entirely on the lender's valuation of your property. Most lenders will organise a desktop valuation or a kerbside assessment rather than a full inspection, and the figure they arrive at may be lower than what you expect. If the valuation comes in under your estimate, the amount you can access drops accordingly. In areas like Joondalup or Baldivis, where property values have shifted over the last few years, it's not uncommon for the valuation to differ from recent sales in the street, particularly if your home needs maintenance or has not been updated.

If the valuation is too low and you don't have enough equity, you can either wait and pay down more of the loan, or you can ask the lender to order a full valuation and provide evidence of recent comparable sales. Some borrowers also improve the property before refinancing, though this only makes sense if the cost of the work is less than the equity it unlocks.

The Refinance Application Process for Equity Release

The refinance process follows the same steps as any other home loan application, but with additional documentation if the funds are for business purposes. You'll need to provide proof of income, recent payslips or tax returns, a current mortgage statement, and a breakdown of how the funds will be used. If you're a company director or self-employed, expect to provide two years of financials and possibly a business plan if the loan amount is significant.

Once the application is submitted, the lender will order a valuation and assess your serviceability. If everything checks out, they'll issue a formal approval, and you'll move to settlement. The timeline is usually four to six weeks, though it can be longer if the valuation is delayed or if the lender requests additional information about your business. The funds are released at settlement, either to you directly or to a third party if you're purchasing equipment or stock through a supplier.

Interest Rates and Loan Features When You Access Equity

The interest rate you're offered depends on your loan-to-value ratio, your credit history, and whether the loan is for owner-occupied or investment purposes. If you're accessing equity from your home to fund a business, the loan is still classified as owner-occupied, which generally means a lower interest rate than an investment loan. However, if your loan-to-value ratio exceeds 80%, you may be charged a higher rate or required to pay lenders mortgage insurance.

Some borrowers refinance to a variable rate with an offset account, which allows them to park business income in the offset and reduce the interest charged without making extra repayments. Others prefer a fixed rate if they want certainty over repayments, particularly if the business cashflow is unpredictable. The loan features you choose should match how the business operates and how quickly you expect to repay the borrowed amount.

When Refinancing for Business Equity Makes Sense

Refinancing to access equity works when the cost of borrowing is lower than the return the business will generate, or when the funds solve a problem that would otherwise limit growth. If your business needs capital and you have equity available, a home loan refinance is often cheaper than a business loan or line of credit, particularly if your property has increased in value and you're on a high interest rate. It's also a useful option if you've been declined for business finance because your trading history is short or your industry is considered higher risk by commercial lenders.

It doesn't make sense if the business is struggling, if your personal income has dropped, or if you're already stretched on serviceability. Adding debt to fund a business that isn't generating consistent income increases the risk to your home, and if the business fails, you're still responsible for the repayments. A loan health check can help you work out whether refinancing is the right move or whether another option, like waiting or restructuring existing debt, would put you in a stronger position.

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