Using Equity to Buy a Second Property – What You Need to Know

Thinking about buying a second property? Whether it’s a holiday home, an investment property, or helping family onto the ladder, tapping into your existing equity could be the key to making it happen —without needing a big lump sum saved up.

In this article, we’ll unpack what equity is, how to access it, and what to consider before making the move.

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What is Equity?

Equity is the difference between your home’s current market value and the amount you owe on your mortgage.

For example:
If your home is worth $900,000 and you owe $500,000, you have $400,000 inequity.

Banks generally allow you to borrow up to 80% of your home’s value. That means in the example above, you may be able to unlock up to $220,000 for a second property — without selling your current home.

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Why Use Equity for a Second Property?

Using equity can be a powerful strategy because it:

• Reduces or eliminates the need for a cash deposit
• Allows you to leverage your existing assets
• Lets your property work for you while it grows in value

This can be especially useful for property investors, parents helping children into their first home, or anyone looking to make a smart long-term move.

Key Considerations Before You Dive In

Using equity isn’t just about borrowing more — it’s about making sure it’s the right financial move for you. Here’s what to think about:

• Your income and borrowing capacity
      Lenders still assess your ability to repay the new loan — even if you’re using equity instead of cash.
• How the second property will be used
      Will it generate rental income? Is it a holiday home? This affects how the bank views the risk.
• Your risk tolerance and long-term goals
      Borrowing more means higher repayments and more exposure if interest rates rise or the market dips.
• Structure matters
      Splitting loans, using interest-only on investment properties, or choosing the right fixed vs floating structure can all help make your plan more sustainable.

How We Can Help

At Optimise Finance, we specialise in helping Kiwi homeowners and investors make confident, informed lending decisions.

We’ll:

• Assess how much usable equity you have
• Model the impact of different loan structures
• Compare banks and non-bank lenders to find sharp options
• Help you manage risk and build a long-term lending strategy

Whether you're in Auckland, on the Hibiscus Coast, or elsewhere in New Zealand, we’re here to make the process simple and tailored to you.

Next Steps

Thinking about using equity to buy a second property? Let’s talk.

👉 Contact us or give us a call for a free, no obligation chat— we’re local, experienced, and ready to help.

• matt@optimisefinance.co.nz or 021 581 502

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Disclaimer: The information in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or other professional advice. While we strive for accuracy, we do not guarantee that the information is complete, up to date, or free from errors. Before making any financial or legal decisions, we strongly recommend seeking independent professional advice tailored to your individual circumstances.

To the fullest extent permitted by law, we disclaim all warranties, express or implied, including but not limited to accuracy, reliability, or suitability for any specific purpose. We accept no liability for any loss or damage arising from reliance on this information.

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