How to Refinance and Release Equity from Your Property

What Refinancing to Release Equity Actually Means

Refinancing to release equity means replacing your current home loan with a larger one and taking the difference as cash. If you owe $300,000 on a property now worth $500,000, you might refinance to a $400,000 loan and walk away with $100,000 in your account, minus costs.

Most lenders will let you borrow up to 80% of your property value without paying lenders mortgage insurance. That means if your property is worth $500,000, you can borrow up to $400,000. If you currently owe $300,000, you have access to around $100,000 in usable equity before hitting that 80% ceiling. Go beyond 80% and you will pay LMI, which can run into thousands depending on the loan size.

The equity you can actually access depends on your income, existing debts, and how the lender assesses your borrowing capacity. A concreter earning $95,000 through a mix of PAYG and ABN work will have their income assessed differently than someone on straight wages, and that affects how much additional borrowing a lender will approve.

Why Concreters Tap Into Property Equity

Concreters refinance to release equity for three main reasons: buying equipment, funding renovations, or consolidating high-interest debts. A concreter might pull $60,000 to buy a second truck and trailer setup rather than taking out a chattel mortgage at 8% when their home loan sits at 6.5%. The interest rate difference alone makes it worth considering.

Others use equity to clear credit cards, vehicle finance, and outstanding supplier accounts that are costing them more each month than a home loan would. Consolidating $40,000 in debts charging between 12% and 22% into a mortgage at 6.5% can cut monthly repayments by half and turn unmanageable cash flow into something workable. You can read more about this approach in our guide to debt consolidation loans for tradies.

Some use equity to fund an investment property deposit or renovation that will add value. Pulling $80,000 to renovate a kitchen, bathroom, and outdoor area can increase a property's value by $120,000 in the right suburb, which improves your overall equity position even after the work is done.

How Lenders Assess Equity Release for Self-Employed Concreters

Lenders look at your property value, your current loan balance, and your ability to service a larger loan. For concreters operating under an ABN, that last part matters most. Lenders typically want two years of tax returns or financial statements to assess your income, and they will average your net profit after deductions.

Consider a concreter who has owned their property for six years and built up solid equity. Their property is now worth $520,000, and they owe $280,000. They want to release $70,000 to buy a concrete pump and pay off a vehicle loan. The new loan amount would be $350,000, which is 67% LVR. The lender's main concern is whether their income supports the higher repayment. If their tax returns show an average net profit of $88,000 over two years, they have other debts totalling $1,200 per month, and the new home loan repayment would be around $2,400 per month, the lender will assess whether that leaves enough for living expenses. In most cases, this scenario works, and the refinance goes through without issue.

If your tax returns show lower income due to aggressive deductions, some lenders will accept alternative documentation like BAS statements, bank statements showing regular deposits, or a letter from your accountant. This is where a broker who understands self-employed loans for tradies becomes useful, because different lenders have different appetites for this type of lending.

What the Refinance Process Looks Like

You start with a property valuation. Most lenders will organise a desktop valuation or a short inspection to confirm your property's current value. If you think your place is worth $550,000 but it comes back at $510,000, that affects how much equity you can access.

Once the valuation is done and your income is assessed, the lender will issue formal approval. Settlement usually takes three to five weeks from application to funds hitting your account. During that time, your current lender may charge a discharge fee, and your new lender will charge establishment fees and valuation costs. Budget around $1,000 to $1,500 in total costs for a standard refinance.

You do not need to change lenders to release equity. Your existing lender might let you increase your loan amount if you meet their current lending criteria. That can save you discharge and establishment fees, but it also means you are not shopping around for a lower rate. Most concreters who refinance will compare what their current lender offers against two or three other options before committing. Our page on home loan refinancing for tradies covers the comparison process in more detail.

Using Equity Without Overextending Yourself

The risk with releasing equity is treating it like found money rather than additional debt. Borrowing $80,000 to buy equipment that generates income is different from borrowing $80,000 to fund a holiday or buy a jet ski. The first one improves your business cash flow and potentially increases your income. The second one just increases your debt without any return.

Before you refinance, calculate what the new repayment will be and whether your current cash flow can handle it during quiet months. Concreting work slows down in winter in some areas, and if you have just added $600 per month to your mortgage repayment, that quiet period hits harder. Run the numbers assuming your income drops by 20% for two months and see if you can still cover the loan, your other debts, and your living costs. If the answer is no, you are borrowing too much.

Another consideration is loan structure. Some concreters split their refinance into two loans: one for the original amount and one for the equity release. That way, if they use the released equity to buy equipment, they can claim the interest on that portion as a business expense while keeping the main loan for personal use. Your accountant will tell you whether this structure suits your situation, but it is worth asking about before you sign anything.

What Happens If Your Equity Has Grown Since You Bought

Property values in many regional and suburban areas have increased significantly over the past few years, which means concreters who bought five or six years ago may be sitting on more equity than they realise. A property bought for $380,000 in a growth area might now be worth $520,000, which is $140,000 in equity growth before you factor in any loan repayments you have made.

If you have been paying down your loan and your property has increased in value, your equity position can be substantial. A concreter who bought at $380,000 with a $340,000 loan and now owes $290,000 on a property worth $520,000 has $230,000 in equity. At 80% LVR, they could borrow up to $416,000, which means they could access around $126,000 in cash while staying under the LMI threshold.

That level of equity opens up options beyond just buying equipment. You could use it as a deposit for an investment property, which is covered in our guide to buying your first investment property. You could renovate your current place and increase its value further. Or you could sit on it and do nothing, which is also a valid choice if your current loan and cash flow are working fine.

When Refinancing to Release Equity Does Not Make Sense

Refinancing to release equity is not the right move if your property value has dropped, if you are already at high LVR, or if your income has decreased and you cannot service a larger loan. If you bought at the peak of the market and your property is now worth less than you paid, you may have little or no equity to access.

It also does not make sense if you are refinancing just to access equity for non-essential spending. Borrowing against your property to fund discretionary purchases means you are paying interest on those purchases for the next 25 years unless you make extra repayments to clear that portion of the loan. The interest cost over time will dwarf whatever you spent the money on.

If you need funds for business purposes but your income is inconsistent or your debts are already high, releasing equity might not be approved, or it might leave you overextended. In that case, looking at equipment finance or a business loan might be a safer option, even if the interest rate is higher, because the loan term is shorter and the risk to your property is removed.

Call one of our team or book an appointment at a time that works for you. We will look at your property value, your current loan, and your income to work out how much equity you can access and whether refinancing makes sense for your situation.

Frequently Asked Questions