Everything You Need to Know About Refinancing for Business

Why Refinance to Access Equity for Your Business?

Refinancing to access equity means replacing your current home loan with a new one that's larger than what you owe, so you can use the difference to fund a business venture or investment. Many Bayswater homeowners sit on substantial equity without realising it's one of the most cost-effective ways to access capital for business purposes.

Using home equity typically costs less than an unsecured business loan or credit card debt because the interest rate is tied to your property, not your business risk profile. The process involves a property valuation to confirm how much equity you have, followed by a refinance application where lenders assess whether you can service the higher loan amount. Most lenders will let you access up to 80% of your property's value, minus what you still owe.

How Much Equity Can You Access in Bayswater?

Your usable equity is the difference between 80% of your property's current value and your remaining mortgage balance. Lenders cap it at 80% to avoid mortgage insurance, though you can go higher if you're willing to pay the premium.

Consider a scenario where your Bayswater home is valued at $650,000 and you owe $380,000. Eighty percent of $650,000 is $520,000, which means you could access up to $140,000 in equity without triggering lenders mortgage insurance. That figure changes depending on your property's location within Bayswater, particularly if you're closer to the Bayswater town centre or near the Noranda industrial precinct where property values can vary. A property valuation ordered by the lender will determine the exact amount.

Can You Use Home Equity for Any Type of Business?

Most lenders will allow you to use equity for starting a business, expanding an existing one, purchasing equipment, or even consolidating business debt. The key factor is whether you can service the higher loan amount, not what the business does.

Lenders assess your overall income, expenses, and financial commitments. If you're self-employed, you'll typically need to provide two years of tax returns and business financials. If you're employed but starting a side business, your regular income can support the loan while the equity funds the venture. In some cases, lenders may ask for a business plan or details about how the funds will be used, particularly if the amount is substantial or your employment situation is less straightforward.

What Happens to Your Interest Rate When You Refinance?

When you refinance to access equity, you're essentially taking out a new loan, which means you can negotiate a different interest rate from what you're currently paying. Some Bayswater homeowners refinance specifically because their current fixed rate period is ending and they want to switch to a variable rate while also pulling out equity.

The rate you're offered depends on your loan-to-value ratio after accessing equity, your income, and how competitive the lender wants to be. If you're increasing your loan from 60% LVR to 78% LVR, you'll often still qualify for a lender's standard rates. Going above 80% typically means higher rates and insurance costs. You can choose between fixed or variable, or split the loan so part of it is locked in while the rest remains flexible. This is worth discussing during a home loan health check to see what structure suits your business and repayment plans.

How Long Does the Refinance Process Take?

From application to settlement, refinancing to access equity usually takes three to six weeks, depending on how quickly the lender can value your property and assess your financials. Some lenders in Perth are faster than others, particularly if you're self-employed or your business structure is more complex.

The valuation is often the first step after you submit your application. If your Bayswater property is a standard residential home in an area like the streets around Whatley Crescent or near the railway line, valuers usually have plenty of recent sales to compare. If your property is unusual or on a larger block, it might take longer. Once the valuation is done and your financial documents are reviewed, the lender will issue formal approval. Settlement involves paying out your old loan and receiving the equity funds, either as a direct transfer or held in an offset account until you need them.

What Are the Costs Involved in Refinancing?

Refinancing to access equity comes with upfront costs that can include a valuation fee, application fee, settlement fees, and potential discharge fees from your current lender. Expect to budget between $1,000 and $3,000 depending on your lender and loan size.

Some lenders will waive the application fee or cover the valuation cost if you're borrowing a certain amount or meet specific criteria. Discharge fees from your existing lender can range from $150 to $400. If you're refinancing out of a fixed rate loan before the term ends, break costs can apply, and these vary widely depending on how much time is left and how far rates have moved. It's worth running the numbers to see whether the equity you're accessing and any rate improvement outweigh these costs.

Should You Use an Offset Account or Redraw for Business Funds?

Once you access equity, you'll need to decide whether to park the funds in an offset account or leave them in the loan with redraw access. An offset account keeps the money separate and reduces the interest you pay on your mortgage, while redraw lets you pull funds out as needed but keeps them technically inside the loan.

For business purposes, an offset account is usually the clearer option because it makes it simpler to track funds for tax purposes and keeps your business cash flow visible. If you're planning to use the equity progressively over several months, an offset account lets you reduce interest on the mortgage while you wait. Redraw can work if you're confident you'll use the funds quickly, but some lenders restrict how often you can redraw or charge fees for access.

Refinancing to access equity for your business gives you a funding option that's typically cheaper than commercial borrowing and lets you keep control over how and when you deploy the capital. If you're a Bayswater homeowner with a solid amount of equity and a clear plan for how the funds will support your business, refinancing can be a practical step. Call one of our team or book an appointment at a time that works for you to talk through your situation and see what's available.

Frequently Asked Questions