Dreaming of a bigger kitchen, an extra bedroom, or finally adding that home office? If you're a homeowner in Melbourne, the funds to upgrade might already be sitting within your property — in the form of equity.
At Essendon Finance , we help homeowners leverage their built-up equity to finance renovations, extend their living space, or even move into a larger property without starting from scratch. If you're wondering how much equity you have, start with our Borrowing Power Calculator — it’s a fast way to estimate your financial potential and plan your next move.
Let’s explore how you can use equity to transform your home and increase its value.
What Is Home Equity?
Home equity is the difference between your property’s current market value and the outstanding balance on your mortgage.
For example:
- Property value: $850,000
- Mortgage owing: $450,000
- Equity: $400,000
Over time, as you make repayments and property values rise (especially in growing areas like Essendon, Brunswick, or Footscray), your equity grows. This creates a powerful financial resource you can tap into for upgrades, investments, or debt consolidation.
Why Upgrade Using Equity?
Using equity to fund home improvements offers several advantages over personal loans or credit cards:
- Lower interest rates: Home loans typically have lower rates than unsecured debt.
- Tax-deductible interest (if used for investment purposes)
- Increased property value: Smart renovations can boost your home’s worth by more than the cost of the project.
- Improved lifestyle: Live in comfort and style without relocating.
Many Melbourne homeowners choose this path instead of selling and moving — especially when they love their suburb, schools, and community.
How to Access Your Equity
There are two main ways to unlock your equity:
1. Refinance Your Existing Loan
You can refinance to a new loan for a higher amount, pocketing the difference. For instance, if you owe $400,000 on an $800,000 home, you could refinance to a $600,000 loan and access $200,000 (minus fees) for renovations.
We recently helped a client in Ascot Vale refinance their home loan and consolidate high-interest debts — while also securing funds for a backyard extension. After the upgrade, they refinanced again at a better rate, saving $350/month. Read their full story here .
2. Use a Home Equity Line of Credit (HELOC) or Variation
Some lenders allow you to increase your existing loan through a mortgage variation, giving you access to funds as needed — similar to a credit card secured against your home.
This option offers flexibility but requires discipline to avoid overspending.
Popular Renovations That Add Value in Melbourne
Not all upgrades deliver the same return on investment. Focus on projects that appeal to buyers and enhance functionality:
Use our Mortgage Repayments Calculator to model how additional borrowing will impact your monthly payments.
Step-by-Step: How to Use Equity to Upgrade
Step 1: Estimate Your Property’s Current Value
Check recent sales of similar homes in your suburb. A professional valuation may be required by lenders.
Step 2: Calculate Your Available Equity
Subtract your remaining mortgage from your estimated property value. Most lenders allow you to borrow up to 80–90% of the value (LVR).
Step 3: Choose the Right Loan Product
Decide whether to refinance or apply for a construction loan. At Essendon Finance , we compare 50+ lenders to find products with flexible drawdowns and competitive rates.
Step 4: Plan Your Renovation Budget
Include builder quotes, council permits, and a 10–15% contingency for unexpected costs.
Step 5: Apply and Secure Approval
We handle the paperwork, liaise with lenders, and ensure a smooth approval process — so you can focus on design and execution.
Risks and Considerations
While using equity is powerful, it comes with responsibilities:
- You’re increasing your debt secured against your home.
- Poorly planned renovations may not add proportional value.
- Interest rates can rise, increasing repayments.
To minimize risk:
- Work with experienced builders
- Get multiple quotes
- Avoid overcapitalizing (spending more than the upgrade adds in value)
We also recommend consulting a tax advisor — especially if you plan to rent out part of your home or use the space for a home business.
Combine Equity with Government Incentives
In Victoria, you may qualify for additional support:
- First Home Owner Grant (FHOG) – if building a new home
- Building Boost program – past incentives have supported construction jobs
- Energy efficiency rebates – for solar, insulation, or water tanks
Use our Stamp Duty Calculator to see if future purchases (e.g., land or investment properties) could benefit from exemptions.
Real-Life Example: From Small House to Dream Family Home
One of our clients in Moonee Ponds owned a 3-bedroom weatherboard with strong equity but limited space. Instead of selling, they used $180,000 in equity to:
- Add a second storey
- Create two new bedrooms and a family bathroom
- Modernize the kitchen and living area
The renovation cost $175,000. Within a year, a revaluation showed their property had increased in value by over $300,000. They now enjoy a spacious family home in a sought-after location .
Why Work with Essendon Finance?
We’re not just about getting you a loan — we’re about helping you build long-term wealth. As a Melbourne-based brokerage led by industry expert Harry Sekhon, we combine local market knowledge with access to 50+ lenders to deliver personalized solutions.
Our services include:
- Free equity assessments
- Refinancing and construction loans
- Debt consolidation
- Insurance and conveyancing support
- Ongoing portfolio reviews
We believe everyone deserves expert financial guidance — whether you're upgrading your first home or expanding your investment portfolio.
Ready to Transform Your Home?
Don’t let your equity sit idle. Whether you're planning a minor refresh or a major transformation, now is the time to act.
Visit our Essendon Finance Calculators to run your numbers, or check out our FAQ page for answers to common questions.
For personalized advice, contact us today for a free, no-obligation consultation. We’ll help you unlock your equity, manage your budget, and bring your vision to life.
Want more insights? Explore our blog and read about Property Tax Loopholes in Melbourne that every owner should know.
Let Essendon Finance be your partner in progress — because your dream home might be just one upgrade away.
