A hfinance client case study
I see this constantly: investors with millions in equity who can’t actually touch any of it. The properties have done their job. The loans haven’t. This is how we rebuilt a $5.25 million portfolio’s lending from scratch and pulled out $900,000 for the clients’ next opportunity — without selling a thing.
The Client’s Situation
A professional couple, no kids, earning around $700,000 combined. Over the years they’d put together three properties — their home and two investments — worth about $5.25 million all up, with $2,100 a week in rent coming in.
All the lending sat with one bank. About $3.27 million, spread across facilities that had been bolted on one purchase at a time. Owner-occupied and investment debt mixed together, repayment types that didn’t match what each loan was actually for, everything cross-secured. The kind of structure nobody designs — it just accumulates.
They wanted capital out for a development opportunity. The equity was obviously there. The structure gave them no way to reach it.
The Challenge
The first problem was purely structural. When your loans have been written deal by deal over years, nothing lines up. Before we could release anything, every property needed a fresh valuation and the whole book needed to be rebuilt on confirmed numbers.
The second problem was tax. Mixed owner-occupied and investment borrowing is an accountant’s nightmare — working out which interest is deductible gets messy, and redrawing against the wrong split can contaminate deductibility permanently. Whatever we built had to draw a hard line between home debt and investment debt.
The third was servicing. Adding $900,000 takes total lending past $4 million — a debt-to-income ratio around five times. Fine for this income, but only if the repayment structure is deliberate. The lender wants to see genuine surplus after assessing the whole book, not just each loan in isolation.
What We Did
We rebuilt the lending as six splits across the three properties, each at or under 80% LVR, each with one job:
- Home debt on principal and interest — the non-deductible part, set up to be paid down first.
- Investment debt on interest-only, five-year terms — better cash flow while their capital is working elsewhere, and deductible interest kept cleanly on its own.
- A dedicated $900,000 split for the equity release, secured against the strongest property and ring-fenced from everything else. Its purpose is unambiguous, which keeps the tax treatment unambiguous too.
Same three properties. Completely different machine.
The Numbers
| Position | Before | After restructure |
| Portfolio value (3 properties) | ~$5.25 million | ~$5.25 million |
| Total lending | ~$3.27 million | ~$4.06 million |
| Equity released for investment | — | $900,000 |
| Loan structure | Tangled multi-facility | 6 purpose-built splits |
| Portfolio LVR | ~62% | ~77% |
They went from a portfolio that looked great on paper and did nothing, to $900,000 of deployable capital with confirmed surplus in servicing and every dollar of debt mapped to a purpose.
If This Sounds Like Your Portfolio
Equity you can’t access isn’t really working for you. If your loans were written one deal at a time, odds are your structure is costing you options right now. And the splits aren’t an admin detail — separating home and investment debt is what keeps your deductions clean and your accountant happy. Fixing a contaminated structure after the fact is much harder than building it properly.
One more thing: release the equity before you find the deal, not after. Good opportunities don’t wait for a six-week refinance. Capital sitting ready in its own split is what lets you move when everyone else is still talking to their bank.
How We Approach These Deals
Restructures like this are where a broker earns their keep. We run valuations across every security first, model the full structure against lender calculators before anything gets lodged, and build the splits with your accountant’s treatment in mind — so the finance, the cash flow and the tax position all pull in the same direction.
This article is general information only and does not constitute credit, financial or tax advice. It does not take into account your objectives, financial situation or needs. Lender criteria, LVR limits, government charges and interest rates are subject to change and vary case by case. Interest deductibility depends on individual circumstances and should be confirmed with your accountant. Figures are illustrative and based on the assumptions stated. Jeremy Harper is a Credit Representative (CRN 463430) of Mortgage Specialists Pty Ltd, Australian Credit Licence 387025.