Can you use equity to buy a second property yet?

The short answer: Not always. Usable equity can cover a deposit, but whether a lender will approve a second loan comes down to servicing, which a broker works through with you. One client sold early to move faster, and that property now sits around $144,000 above their sale price. Waiting costs time; selling early has its own costs.

A client who wanted to buy again inside a year

I’m a buyers agent, and this is a property I bought with a client.

From month one they asked when it would “boom”. At our 1 month and 6 month check-ins they said they wanted to pull equity out and go again, the way it gets blasted online. Both times I told them to be patient.

They got some equity out inside the first year. Around the 12 month mark I heard the property had sold, and the listing confirmed it. When I rang for our 12 month check-in, they told me straight. Another adviser had told them to sell and move on.

I wished them all the best and said the door was open if things changed.

Equity was not what was holding them back

Nothing I’d seen had changed my view of the purchase. And equity wasn’t what stood between them and a second property. Servicing was.

That is a lender’s call, worked through with a broker. A property going up in value doesn’t fix it.

What selling early cost

Waiting feels like falling behind, especially with what gets posted online. Selling costs something too. You pay to sell, then pay again to buy, and the clock starts over. If the money from the sale only stretches to one property, you’re back to owning one property, just later, and after paying twice to get there.

Holding has its own path. With more time, rent and income can both rise, and both feed into what a lender will approve. That’s the route I’d have expected to lead to a second purchase, though a broker would have had to confirm it at the time.

That property now sits around $144,000 above what they sold it for. I couldn’t have told them that at the time, and I won’t pretend I could.

Why “not yet” can be the useful answer

Sometimes the most useful thing I can say about a next property is “not yet”. It can cost me the client. It did here.

Every strategy I write says upfront when I’d expect equity to be usable. I don’t give one number. It depends on the market, the strategy, the client’s income and where the next deposit is coming from. I keep the estimate conservative, because nobody knows for certain.

I track every purchase after settlement too. I still track that one.

Equity and servicing answer different questions

Equity shows what you could put in. Servicing shows whether a lender will back you.

If you need a second property this year, waiting will frustrate you. If you plan to hold for a long time, I’d rather wait than restart the clock.

If you’re weighing a second purchase, which are you waiting on: equity, savings, or someone to say go?

Frequently asked questions

Does having equity mean I can buy another property?

Not on its own. Equity can cover a deposit, but a lender still has to approve the loan on servicing. A mortgage broker can work through that with you.

Is it worth selling an investment property after one year?

Selling early means paying to sell, paying again to buy, and restarting the clock. If the proceeds only stretch to one property, you can end up back where you started. In this client’s case, the property now sits around $144,000 above their sale price.

When can I use equity from an investment property?

There is no single answer. It depends on the market, the strategy, your income and where the next deposit comes from. Any estimate should be conservative, and servicing should be checked with a broker.

Disclaimer: The information in this article is general in nature and does not take into account your personal objectives, financial situation, or needs. It is not financial, legal, or tax advice. The Nelis Group accepts no liability for actions taken based on this content. You should seek independent advice from a relevant licensed professional before making any decisions and always confirm the latest rules and thresholds with your state revenue office or relevant authority.