Cash Out Refinance
Cash Out Refinance is the process of refinancing an existing property loan for a higher amount than the current outstanding balance, with the difference paid out to the borrower as cash. It's a common strategy for accessing the equity built up in a property without selling the asset.
Why It Matters
Property values in Australia have generally risen over time, meaning many borrowers are sitting on significant untapped equity. A Cash Out Refinance converts that paper wealth into usable capital — for business investment, renovations, purchasing additional property, or consolidating higher-cost debt like business loans or unsecured facilities. For self-employed borrowers, this can be done through Alt Doc Refinance pathways if full financial statements aren't available.
How It Works
- Your existing property is valued to determine current market value.
- The lender calculates the maximum new loan amount based on the LVR policy.
- The new loan amount is set higher than your current balance — the gap is the cash-out portion.
- If servicing passes on the total new loan amount, the refinance is approved.
- At settlement, your old loan is repaid and the cash-out amount is deposited into your account or offset account.
Common Use Cases
- Funding a business expansion or capital expenditure
- Paying a deposit on an investment property
- Renovating an existing property to increase its value
- Consolidating high-interest business loans, unsecured business loans, or personal debts
- Covering a large one-off expense without liquidating other assets
Related Switchboard Resources
For guidance on using property equity responsibly, visit moneysmart.gov.au.