Top Strategies to Access Equity for Your Business

You can refinance your home loan to access equity and use the funds for your business, but the way you set it up matters as much as the amount you borrow.

If you own a home in Cannon Hill and have built up equity, a refinance can turn part of that into working capital, equipment or a business purchase. It also puts your home on the line for that borrowing. This article walks through how it works, what lenders check, and how to structure it clearly.

How Does a Cash Out Refinance Work for Business Funding?

A cash out refinance replaces your current home loan with a new, larger one, and you receive the difference as cash. The extra amount is secured against your home, so your loan amount goes up.

Equity is the gap between what your home is worth and what you owe. A lender will order a property valuation to confirm that figure, then set how much you can borrow against it. You can do this with your current lender or move to a new one through a refinancing application.

Because the debt rises, APRA does not treat this as a like-for-like refinance, which is a move between lenders without adding to your total debt. Expect a fuller assessment than a straight rate switch.

What Do Lenders Check Before You Unlock Equity?

Lenders check the property valuation, your income, your existing debts and whether you can afford repayments at a higher test rate. Under APRA's rules, banks must test new borrowers at a rate at least 3 percentage points above the loan rate, and APRA confirmed in May 2026 that this stays in place.

If the funds are for business, the lender will also want to understand the business and your own financial position. Credit used wholly or mainly for business purposes sits outside the National Credit Code. Lenders will normally assess repayment ability under their own credit policies, but the statutory responsible lending obligations may not apply if the credit is wholly or predominantly for business. Stating a business purpose does not change the rules if the money is really for personal use.

Before you apply, check your borrowing capacity so you know the likely limit. If you are after finance for the business itself, such as property or equipment, our commercial loans page covers other options.

Example: Releasing $100,000 for Equipment, Two Ways to Repay

Consider a Cannon Hill homeowner who wants $100,000 for equipment for their trade business. Their home has enough equity at the lender's valuation, and they have a regular repayment history. All figures below use an illustrative rate of 6.75% p.a., not a current offer.

They ask their broker to split the new loan. The existing balance stays in one split, and the $100,000 goes into its own split. This keeps the business borrowing separate and easier to explain to their accountant.

Over 25 years on principal and interest, the extra $100,000 would add about $691 a month. With interest-only for the first five years, the repayment on that split would be about $562.50 a month. After that, repayments would move to principal and interest over the remaining 20 years, at about $760 a month. The owner chooses interest-only to ease cashflow while the equipment starts earning.

The trade-off is clear. During the interest-only period the $100,000 does not reduce, and the later repayment is higher because the remaining term is shorter. Whether interest on the split is tax deductible depends on how the funds are used, not on the home securing the loan, so they confirm it with their accountant first.

What Does It Cost to Release Equity, and What Is the Risk?

The main risk is that your home secures the new debt, so if the business struggles, your home is exposed. The main costs are lender fees and, in some cases, lenders mortgage insurance.

Moneysmart lists common switching costs, including a discharge fee on closing the old loan and an application fee on the new one. If your current loan is fixed, a break fee may apply. If you would have less than 20 per cent equity left, you may also face LMI. Fees vary by lender, so ask for the full list in writing.

ASIC's guidelines say a refinance should deliver overall cost savings that outweigh lost benefits, or better meet your needs, and brokers have duties to act in your best interests. These apply to regulated credit, for example if part of the cash-out is for personal or household purposes. A loan used wholly or mainly for business may not carry them. Stretching the term to lower repayments also means paying more interest over time, so ask your broker or lender in writing about the costs of a longer term and whether the refinance saves you money overall.

If you want to improve cashflow, a redraw or offset account on the new loan can help, though some lenders limit these features. Check how any feature affects the way your accountant sees the borrowing.

Should You Release Equity Now or Wait for Your Fixed Rate Period to End?

If your loan is fixed, waiting until the fixed rate period ends can avoid a break fee, though it is not always the right call. A break fee applies only to ending a fixed loan early, and variable loans do not carry one.

Your fixed rate expiry date is a natural time to review your options, because you can compare lenders and structures without a break fee. If your business need is urgent, the cost of waiting can outweigh the fee, so it is worth running the numbers both ways.

A loan health check shows your current rate, features and equity in one place. It also shows whether a home loan refinance would suit you, or whether staying put is the smarter move. A good broker will compare staying with your current lender against switching, and where the loan is regulated credit, brokers must act in your best interests.

If the borrowing is for an investment property, our investment loans page covers that path. Tax rules for investors have changed, so speak to your accountant.

Call one of our team or book an appointment at a time that works for you, and we will check your equity, compare your options and explain the costs in plain language before you decide.

Frequently Asked Questions