So you've had your first investment property for a while and it's doing well. You're enjoying the benefits of investing in property, but you want to move up the ladder. And so you decide it's time to buy another property. But do you need to sell your existing property before buying a second one? If not, what are your options?
Buying a second investment property without using cash savings for the deposit may be possible if you can access equity in a property you already own. You'll still need to fund the deposit and purchase costs, and your lender must approve the mortgage on your next property. In this guide, we'll look at how investors can arrange the capital, what the numbers might look like and what to check before committing to another purchase.
This guide focuses on investors who already own a rental property and want to buy another. If you're planning to move out of your current home and rent it out, our guide to buying a second property and renting out the first covers the additional considerations involved.
Do you have to sell your first property to buy a second property?
You don't necessarily need to sell your first investment property to buy a second. Investors with sufficient equity, income and borrowing capacity may be able to keep receiving rent from their existing property while purchasing another. Whether that's affordable depends on the ongoing costs of holding both properties, including the possibility that rent won't cover the mortgage and other expenses.
There are benefits to buying a second property without selling your first:
- avoid paying real estate agent commission
- avoid paying potential capital gains tax
- no need to worry about juggling the selling and buying processes at the same time
- no time pressure
Before making an offer, work out how you'll fund the deposit and buying costs, then assess the combined mortgage commitments and property expenses. Your accountant can help estimate any capital gains tax that might arise if you sold the first property. Retaining it generally avoids triggering a disposal at that point, but you'll still need enough cash flow and financial flexibility to support your plans.
How do you buy a second property with no deposit?
When investors talk about buying a second property with no deposit, they usually mean purchasing without contributing additional cash savings towards the deposit. The seller still receives the required deposit, and the purchase must still be funded. Investors may be able to source that money from available equity in an existing property, an approved finance facility or another capital-access arrangement.
That funding is only part of the picture. You'll also need to budget for stamp duty, conveyancing, inspections and an initial buffer for vacancies or repairs. Your lender will want to understand where the deposit is coming from and whether you can afford the new mortgage alongside your existing debt.
Equity
If you've been paying down your mortgage or your investment property has increased in value, you may have equity available to help fund the deposit on another property. Even if your property's value has fallen since purchase, you could still have usable equity, depending on the remaining mortgage balance and the lender's valuation.
Many investors access this equity through a mortgage top-up, separate loan split or cash-out refinance. Each option has different approval requirements and may affect your mortgage costs. Your lender will generally check the property's value and assess whether you can afford the additional borrowing, so an equity figure on paper doesn't guarantee access to the full amount.
Mortgage top-up or separate loan split
Ask your existing lender whether you can increase your mortgage or set up a separate loan split against your investment property. This may let you access deposit funds while keeping your existing bank and, depending on the arrangement, your original mortgage terms. For example, NAB says its home loan top-ups generally leave the existing loan term unchanged, although applications remain subject to assessment.
A top-up increases the debt you need to service and may increase your repayments, so compare the interest, fees and total cost with a full refinance. If the funds are being used to purchase another investment property, keeping the borrowing in a separate loan split can also make it easier to track the purpose of the debt for tax records. Your lender and accountant can advise on an appropriate structure.
Line of credit home loan
Similar to a credit card, a line of credit home loan is a form of revolving credit, except it’s based on the amount of equity you have. On a line of credit loan, you’ll have a pre-approved limit which you can draw up to, without having to go through a loan application every time you borrow money.
You only need to pay interest on what you’ve drawn, though note that interest rates on line of credit loans are generally higher than standard mortgages.
Futurerent
Futurerent lets eligible Australian property investors cash out up to $100,000 from an investment property, or up to $500,000 across multiple properties, without refinancing or changing their existing mortgage. The upfront amount is returned through an agreed portion of future rent collected by the property manager, while the investor continues receiving the remaining rental income.
There is an upfront setup cost and a fixed funding cost, so it's important to check the total amount payable and how much rent will remain available for your existing mortgage and other expenses. Futurerent uses a soft credit check that doesn't affect your credit score, although a future mortgage lender may still consider the rental income allocated to Futurerent when assessing your borrowing capacity. If you're planning another purchase, discuss the arrangement with your mortgage broker before committing to the new property.
You can use the Futurerent calculator to see an indicative cash-out amount, the costs and the remaining rental income.
How do you calculate how much equity is in your existing property?
To calculate your property’s equity:
- Find out the current value of your property.
- Find out your remaining loan amount (your debt).
- Subtract your debt from your property’s value. This is your equity.
But it’s unlikely that you’ll be able to access all of it. Generally, lenders only lend up to 80% on the value of your property minus what you owe, unless you’re willing to pay lenders’ mortgage insurance (LMI).
To calculate your property’s usable equity:
- Work out 80% of your property’s current value.
- Find out your remaining loan amount. Subtract your debt from 80% of your property’s value. This is your usable equity.
Property value x 80% - what you owe = your usable equity
Here’s a simple example to work out your usable equity:
- Let’s say your property is worth $500,000 and your loan amount is $300,000.
- 80% of $500,000 is $400,000
- After subtracting your debt ($300,000) from this, you’re left with $100,000 in usable equity.
In this example, $100,000 represents potential usable equity at an assumed 80% loan-to-value ratio. It isn't an approval for a $100,000 mortgage increase. Your lender still needs to assess your income, other debts, living expenses, rental income and proposed new mortgage. Some lenders may permit a higher LVR with additional costs or requirements, while others may approve less depending on the property and your financial circumstances.
If it’s too complicated, there are also home loan calculators available online to help you work out your equity.
How much equity do you need for a second investment property?
Suppose you own an investment property valued at $800,000 with $420,000 remaining on the mortgage. At an assumed 80% LVR, you could have up to $220,000 in potential usable equity before the lender assesses whether you're eligible to borrow it. Now suppose you want to purchase another investment property for $650,000 in NSW.
A 20% deposit would be $130,000. Under NSW's 2026–27 general transfer duty rates, stamp duty on a $650,000 purchase would be approximately $23,437, assuming no surcharge, exemption or concession. If you also budget an illustrative $3,000 for conveyancing and reports and $10,000 as an initial cash buffer, you'd need to arrange $166,437 outside the new property's mortgage.
If the bank approves the funding, you could potentially source that amount from your existing property and take out a separate $520,000 mortgage on the new investment. You would then have debt against both properties. This example shows why having enough equity is only the first step. The lender must still approve the additional borrowing against your original property and the mortgage on the new property, after assessing whether you can service both.
Can you get another mortgage if the deposit comes from equity?
Potentially, yes. A bank may accept a deposit funded using equity in an existing property, but it will generally assess your overall financial position and the proposed borrowing arrangement. That includes any top-up on your current mortgage, the new loan, household expenses and the rental income it is prepared to recognise from both properties.
Australian banks generally apply an interest-rate buffer when assessing mortgage serviceability. APRA's current policy maintains a three percentage point serviceability buffer, and its lending guidance expects prudent allowances for vacancies and other uncertainty in rental income. As a result, an investor with substantial property equity may still be declined for additional lending if the projected mortgage repayments are too high relative to their assessed income and existing commitments.
Before paying a deposit or bidding at auction, ask a mortgage broker to assess your borrowing capacity using both properties and the proposed source of deposit funds. Our guide to equity versus borrowing capacity explains the distinction in greater detail.
How do you buy multiple investment properties?
Buying more investment properties can expand your opportunities for rental income and long-term capital growth, but each purchase also adds financial commitments. Before growing your portfolio, consider whether the new property fits your goals and how it would perform if interest rates rise, rental income falls or major expenses arrive together. Having a clear financial plan makes it easier to decide when another purchase is appropriate.
Understand how leverage affects your returns
Leverage means using borrowed money to invest. It can help you buy a second property sooner, but it also increases your exposure to changes in property values and holding costs. If property values rise, your return on the capital you've contributed may be amplified. If values fall or rental income is lower than expected, you still need to meet the mortgage repayments and other expenses.
It's worth comparing how much you'd need to contribute each month across both properties, including periods of vacancy or unexpected repairs. Holding a larger portfolio can be worthwhile when the ongoing costs remain manageable and the purchases fit your investment strategy.
Maximise your borrowing power and serviceability
Before taking on another mortgage, review your existing debts, credit limits, household expenses and current property costs. Lenders consider these when estimating how much you can afford to repay. Paying down expensive personal debt or reducing unused credit limits may improve your position, although consolidating short-term debt into a mortgage can increase total interest and put your property at risk if repayments become unaffordable. Compare the consequences with your mortgage broker before restructuring existing debts.
Find the right lender
Different lenders have different assessment policies, and those differences can influence how much an investor qualifies to borrow. Rental income is generally discounted rather than counted dollar for dollar. APRA's prudential guidance describes a minimum 20% discount on expected rental income as prudent practice, with larger allowances appropriate in some circumstances. A mortgage broker can help compare lender policies using your actual income, expenses, existing debt and the expected rent from the second property.
Maximise cash flow
The higher your cash flow, the more likely and easily you’ll be able to service your home loan repayments and buy additional properties. If you’re positively geared, you’re effectively making a profit every month. This enables you to reinvest surplus cash flow into funding the costs of securing your next investment property. On the other hand, if you’re paying out of pocket on ongoing property holding costs, this will hold back how fast you can save.
Buy properties under market value
Securing real estate at a discount can help you build equity quicker than waiting for the market to rise. Searching for these hidden gems can be tricky but they are out there.
One way is to seek properties that have been on the market for a longer-than-average time. Some investors hunting for a bargain target distressed properties for sale. Another way to find properties under market value is to look at unrenovated properties which you’ll easily be able to add value to.
What are the costs you need to consider when buying your second property?
Even though you don’t necessarily need a deposit to buy your second property, there are still other upfront buying costs that you might have to pay. Here are some that you should consider when buying:
Stamp duty
Transfer duty, often called stamp duty, can be one of the largest upfront costs when buying an investment property. The amount depends on the state or territory, purchase price and any applicable exemption, concession or surcharge. Many first-home buyer concessions have eligibility conditions that investment purchases won't meet, so check the rules for your particular transaction rather than assuming a reduced rate applies. Use your state revenue office's calculator to estimate the duty before making an offer.
Lenders mortgage insurance (LMI)
If you're borrowing more than 80% of the property purchase value, lenders will typically require you to pay for this form of insurance which covers them in the event that you default. While it’s generally not a small cost, some investors see it as a necessary evil to grow their property portfolio.
Legal costs
A solicitor or conveyancer reviews the contract, handles transfer documents and helps coordinate settlement. The fee and payment schedule depend on the provider and transaction. Ask for a quote explaining professional fees, searches, disbursements and when payments are due so you can include these expenses in your purchase budget.
Inspection costs
If you’re buying a freestanding house or attached dwelling, it’s recommended that you get a building and pest report. If you’re buying any property type on strata title, such as an apartment, you should get a strata report. These reports can help you detect a property’s hidden issues before you sign on the dotted line, potentially saving you a lot of money down the track.
Initial lease costs
The initial lease costs include the letting fee charged by your leasing agent plus any marketing costs to advertise the rental listing. This may not be top of mind, but you'll need to factor in forgoing the first few weeks of rent to secure an ongoing tenant. Before your first tenant moves in, you may also have a vacancy period where you won’t receive rental income.
What are the tax implications of using equity for your next property?
When you borrow against an existing investment property to buy another property, the purpose of the borrowed funds generally matters when determining whether the interest is tax deductible. Interest on money used to acquire an income-producing rental property may be deductible, while interest on money used for personal expenses generally isn't. The property used as security for the borrowing doesn't, by itself, determine the tax treatment.
If you're increasing an existing mortgage to fund your next purchase, keep clear records of where the money goes and consider a separate loan split to distinguish investment borrowing from any private borrowing. You should also speak with your accountant about stamp duty, acquisition costs and any ownership-structure considerations before proceeding.
Other things to consider before buying a house
Aside from costs, there are a few other things to factor in before you make the decision to buy a second property:
- Borrowing power: Buying an investment property isn’t just about the deposit, it’s also very much about what you can afford to borrow, which will be based on your financial situation. Use home loan calculators or speak to a mortgage broker to find out.
- Mortgage type: There are many different home loan types out there but now that you also have an existing loan to consider, you’ll want to structure your loans strategically.
- Rental returns: Cash flow is king in property investing. Look at the property’s potential annual rental income to gauge if a property is going to be positively or negatively geared and plan accordingly.
- Capital growth: A property that generates strong capital gains will help you build equity faster, enabling you to buy your next property with no deposit much sooner.
- Rental demand: If a property is attractive to tenants and easily rented out, this could help minimise the chance of holding an empty rental which isn’t generating rental income for you.
Follow your property investment strategy
Buying your second investment property is an exciting milestone as you work to build your portfolio and increase your wealth. It’s also the time to start thinking more about your property investment strategy and how you want to move forward.
Whether you want to buy and hold or target negatively geared properties, having a well-defined property investment strategy will set a clear pathway to your goals. All investment strategies have their own advantages and disadvantages so you’ll need to weigh them up to find the one that’s right for you.
It’s important to be adaptive when the situation calls for it but ultimately, following your strategy will guide you to make informed decisions on your investing journey.
Frequently asked questions
Can I buy a second investment property with no cash savings for a deposit?
Potentially, if you can arrange the deposit using accessible equity or another approved funding source. You'll still need to cover purchase costs and qualify for any additional mortgage borrowing. Your lender will assess the source of funds alongside your income, commitments and the expected costs of owning both properties.
Does having enough equity guarantee approval for another investment loan?
No. Equity determines how much security may be available, while borrowing capacity depends on your income, living expenses, debts and the lender's serviceability assessment. A bank can decline a new mortgage even if your existing property has substantial equity.
Can Futurerent help fund a deposit without refinancing?
Eligible property investors can access an upfront cash-out through Futurerent without changing their existing mortgage. The arrangement involves setup and fixed funding costs, and an agreed portion of future rent is allocated to Futurerent. You'll still need approval for the mortgage on the property you want to buy, and that lender may consider the reduced rental income available during the agreement.
Do I need a 20% deposit to buy a second investment property?
Not always. Some lenders may permit a higher LVR, although lenders mortgage insurance, additional fees or other eligibility requirements may apply. The amount available also depends on the property and your financial circumstances, so confirm the expected deposit and complete purchase costs with your lender or mortgage broker.
