Property investors are preparing for significant tax changes commencing on 1 July 2027. For some owners, this may require an independent valuation to establish the property’s value at the relevant date.
That valuation may also reveal something equally important: how much equity you currently hold—and how much a lender may allow you to access.
This makes now an appropriate time to undertake two related reviews:
- Confirm your property valuation and future CGT requirements with your accountant; and
- Review whether your finance structure remains competitive and supports your future plans.
The objective is not to borrow unnecessarily or speculate on property. It is to understand your position and, where appropriate, preserve access to capital while your valuation, income and borrowing capacity remain supportive.
How falling values affect accessible equity
A property’s value is one of the main variables lenders use to calculate available equity.
Consider an investment property worth $1 million with a $600,000 loan:
| Position | Current value | After a 10% decline |
| Property value | $1,000,000 | $900,000 |
| Existing loan | $600,000 | $600,000 |
| Gross equity | $400,000 | $300,000 |
| Maximum lending at 80% LVR | $800,000 | $720,000 |
| Potential accessible equity* | $200,000 | $120,000 |
A simplified illustration before serviceability, lender policy, fees and other restrictions.
A 10% decline reduces potential accessible equity from $200,000 to $120,000—a difference of $80,000.
The equity has not disappeared dollar-for-dollar. Rather, the lender’s maximum loan amount has fallen because it is calculated against a lower valuation.
What are the banks forecasting?
The outlook differs substantially between markets, and a 10% national decline is not the consensus forecast.
Commonwealth Bank expects broadly flat national prices, with weaker conditions in Sydney and Melbourne. It has also observed sharper falls in some higher-value markets, including parts of Sydney’s east and north-west.
More bearish published forecasts attribute:
- A 9% 2026 decline in Sydney and Melbourne to NAB’s chief economist; and
- A 10.6% national decline over approximately 18 months to ANZ, with larger falls possible in Sydney.
These are forecasts, not guarantees. The important point is that a credible downside risk exists—and a lower valuation may reduce the capital available later.
Refinancing may also reduce existing loan costs
A strategic review is not limited to accessing equity. A lower rate may reduce interest and create additional cash flow that can be retained in an offset or used to repay the loan sooner.
Consider this illustrative comparison:
| Variable | Existing loan | Recommended loan |
| Balance | $770,000 | $770,000 |
| Modelled monthly repayment | $4,611.55 | $4,034.23 |
| Interest rate | 7.34% p.a. | 6.04% p.a. |
| Remaining/new term | 20 years | 30 years |
| Monthly repayment difference | — | $577.32 |
| Modelled refinancing benefit | — | $207,834.17 |
| Benefit with $577.32 extra | — | $376,548.34 |
The proposed loan reduces the rate by 1.30 percentage points and the modelled minimum repayment by $577.32 per month.
The stronger result comes from continuing to commit the previous repayment. If the $577.32 difference is directed to the loan or retained in an offset, the modelled benefit increases from $207,834.17 to $376,548.34.
Refinancing creates the opportunity. Repayment behaviour determines how much of it is captured.
The key variables are the interest-rate differential, loan term, refinancing costs and additional repayments. Extending a 20-year loan to 30 years may improve cash flow, but it can increase total interest if only minimum repayments are made.
Preserving access to capital
For suitable borrowers, refinancing may also involve establishing a separate investment facility secured against available property equity.
The facility may be structured on an interest-only basis, with drawn funds held in a correctly linked 100% offset account until required. While fully offset, little or no net interest may be charged, although fees and other costs can still apply.
This provides access to approved capital without requiring an immediate investment. It may help fund a future property purchase, business opportunity or other approved purpose when the timing is right.
However, interest-only lending and accessing equity will not suit everyone. Rates may be higher, principal does not reduce through scheduled repayments, and future repayments can increase. The use and movement of borrowed funds may also have to be considered along side a banks policy consideration and lending criteria, while it’s pertaining to conduct this in relation to any tax related and financial advice that applies to your situation.
Reviewing your loan now may identify a lower rate, a more suitable structure or equity that could become harder to access later.
Nava Financial can compare your existing loan, model the effect of different rates and terms, and assess whether an offset or separate investment facility is appropriate.
General information only. Credit remains subject to valuation, serviceability, lender policy and approval. Seek taxation and financial advice before acting.