The Investor’s Dilemma
A common assumption among aspiring property investors is that buying an investment property requires selling your current home, taking on massive risk, or saving for many years to accumulate a huge deposit. It’s a belief that keeps many people on the sidelines, waiting for the “perfect” time that never seems to arrive.
This was the exact situation for a family from Sydney’s lower north shore. With three kids, a significant mortgage, and the husband on parental leave, they felt financially powerful yet practically “stuck. ” The wife, a senior investment banker with a PAYG salary of $575,000 and six-figure bonuses, had big goals but believed their next major investment was still years away.
This article reveals the key strategies they used to purchase an $885,900 investment property without selling their home, draining their savings, or compromising their lifestyle. It’s a practical look at how the right financial structure can unlock opportunities that seem out of reach.
Your Home’s Equity Is Your Hidden Investment Capital
The foundation of this strategy was unlocking the wealth the familyhad already built within their primary residence. They owned a home valued at over $3.2 million with an existing mortgage of approximately $2 million, giving them a substantial equity position. Instead of letting this value sit dormant, they put it to work.
Through a structured equity release with their existing lender, CBA, they accessed $370,000 of this capital. Crucially, this was achieved without needing to refinance their entire $2 million mortgage, which simplified the process and allowed them to move quickly. This approach demonstrates a powerful concept: you can access the wealth you’ve accumulated in your property without the disruptive step of selling the family home.
Like many Australians, they were technically in a powerful financial position but they couldn’t access that power without a plan.
You Can Protect Your Savings and Still Invest
A major hurdle for the family was a strong desire to protect the substantial savings buffer they had built in their offset account. The thought of depleting this safety net for an investment deposit was a significant barrier to action.
The solution was to strategically structure the equity release. This wasn’t just about funding one property; it was about creating a flexible war chest. The $370,000 was divided into two separate loan splits, each with a designated purpose:
- A $220,000 split was allocated specifically for the deposit and associated costs of the new investment property.
- A $150,000 split was reserved for future flexibility, covering potential renovations, lifestyle needs like a holiday, or allowing them to seize future investment opportunities without repeating the entire process.
This structure allowed the family to fully fund the down payment for an $885,900 property while keeping their entire savings buffer intact. It’s a crucial takeaway for any investor, as it separates personal savings from investment capital, which reduces perceived risk and protects the family’s financial security.
Smart Debt Can Be a Powerful Tax Reduction Tool
With a salary of $575,000 plus bonuses averaging around $380,000 per year, the wife was in the top marginal tax bracket. This presented a strategic opportunity for tax efficiency.
The strategy was simple but powerful: the investment property was purchased in her name only. By using borrowed funds (the equity release) to purchase an income-producing asset titled solely to the highest earner, the interest on that specific loan becomes fully tax-deductible against her income.
The benefit is immediate and tangible: instead of watching nearly half of every bonus dollar disappear in tax, a large portion of her income is now offset by interest expenses on the new investment loan. This is a classic, proven strategy for wealth creation. Its effectiveness hinges on setting up a clean loan structure from the very beginning, where the ownership and purpose of the debt are clearly defined to maximise tax benefits.
The Right Lender and Structure Are More Important Than the Lowest Rate
Interestingly, the optimal solution did not involve finding the single lender with the lowest interest rate. For the initial $370,000 equity release, the family chose to stay with their existing lender, CBA. Having had a negative experience with another lender previously, they valued the ease and familiarity of their current bank over chasing a slightly lower rate elsewhere.
However, for the new investment property loan, a different lender, Macquarie Bank, was selected. This decision was based on specific strategic advantages, including policy flexibility, a streamlined construction loan process, and favorable treatment of high-income PAYG applicants. The client also had an existing loan with Macquarie, which gave her further confidence in their process.
Macquarie provided a $708,720 loan, which was meticulously structured as two separate facilities: a $292,820 land loan and a $415,900 construction loan. Both were set on a 30-year term with the first five years as interest-only to maximize cash flow during the build. This two-lender approach highlights a critical point: the best strategy isn’t about finding the single cheapest loan. It’s about assembling a team of lenders and products whose policies align perfectly with your specific goals.
From “Stuck” to Scalable
This case study shows that being a high-income earner with an existing property doesn’t mean you are stuck. The right financial strategy, properly executed, can unlock the hidden potential in your current assets and turn ambition into action.
Within just four weeks, this family successfully purchased an interstate investment property and established a clear, scalable framework for their future portfolio growth. This wasn’t a one-time transaction; it was the start of an ongoing system. We’ve already scheduled annual portfolio reviews, lender revaluations, and milestone tracking to support the next investment phase.
It serves as a powerful reminder that progress isn’t always about waiting and saving more. Sometimes, it’s about looking at what you already have with a new perspective. What untapped potential is waiting in your current financial structure, and what could a clear strategy unlock for you?