How a cash-out refinance works
A cash-out refinance replaces your home loan with a larger one, pays out the old loan, and releases the difference to you as cash. Lenders will usually go to 80% of the property's value after the new loan is drawn, ask what the money is for, and assess the application harder than a plain refinance. This guide covers the limit with a worked example, the purposes and evidence, the costs, and how it compares with a top-up.
- The new loan usually has to sit at or below 80% LVR after the cash is drawn: an $800,000 home with $400,000 owing gives up to $240,000 (Unloan’s published example); above 80% means LMI
- Lenders ask the purpose and may want evidence: renovation quotes, statements for debts being consolidated; ME publishes that business purposes are excluded
- It costs what any refinance costs, plus harder assessment: discharge, registration and discharge fees of $130 to $250 each by state, any break cost on a fixed rate
- A top-up with your current lender is cheaper and faster if they will do it; a cash-out wins when the new rate is lower or your loan is fixed
- Repaid over the remaining 25 to 30 years unless you set a shorter term, so cheap money can cost more in total than a five-year loan
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.
What is a cash-out refinance?
An ordinary refinance replaces your loan with one of the same size at a new lender. A cash-out refinance replaces it with a bigger one: the new lender pays out the old loan at settlement and deposits the difference to your account. The extra amount is secured by the same property, priced at the new home loan rate, and repaid over the new loan's term. It is the route to your equity when you are changing lenders anyway, when your current lender will not increase your loan, or when your loan is fixed and a top-up would trigger break costs.
How much can you cash out?
The line most lenders publish is 80% of the property's value after the new loan is drawn. Unloan's published example: a property valued at $800,000 with $400,000 owing gives a maximum loan of $640,000 at 80% LVR, so the available cash-out is $240,000. The lender's valuation sets the value, not your estimate, and Unloan publishes that the valuation is arranged as part of the application and determines how much equity can be released. Above 80%, some lenders will go further with lenders mortgage insurance; Westpac publishes that a top-up beyond 80% may be possible with LMI. The home equity calculator gives your 80% and 90% figures.
The second limit is serviceability. The larger loan is assessed like a new mortgage, with the same interest rate buffer, and Unloan publishes that lenders look more closely at a cash-out application than a standard refinance because the amount is larger. If your income has not moved since the original loan and rates have, the cash-out available on serviceability can be less than the equity allows.
What purposes do lenders accept, and what evidence do they want?
Renovations, debt consolidation, an investment property deposit, and large one-off expenses are the purposes Unloan names, and it publishes that some lenders require supporting documents such as quotes or evidence of the existing debt. ME publishes that released funds cannot be used for business purposes or expenses. For debt consolidation the lender usually pays the other creditors directly at settlement, which Westpac describes for its loan increase, so the cards and personal loans are closed rather than left open beside the new mortgage. If the purpose is an investment, keep it in a separate split from day one so the interest can be traced for tax.
What does a cash-out refinance cost?
Everything a refinance costs, listed with a $300,000 worked example in the refinancing costs guide: a discharge fee from the old lender, the state land registry's mortgage discharge and registration fees (Unloan publishes $130 to $250 each, charged twice, varying by state), and any application, valuation or settlement fee at the new lender. If you are leaving a fixed rate, the break cost is the item that can outweigh the rest; the fixed rate ending guide explains how it is calculated. A cashback offer from the new lender can cover the lot, and the conditions usually include a minimum loan size and LVR.
Cash-out refinance, top-up or personal loan?
| Option | Best when | Cost of setting up | Cost over time |
|---|---|---|---|
| Top-up with your current lender | Your loan is variable, your lender allows it, and you are happy with the rate | Lowest: no discharge, no new loan; Westpac covers the first valuation, Bankwest one standard valuation | Home loan rate over the remaining term unless you shorten it |
| Cash-out refinance | A new lender has a better rate, your lender declined the increase, or your loan is fixed | Discharge, registry fees, possibly break costs; offset by any cashback | New home loan rate over the new term |
| Personal loan | The purpose is short-lived and the amount is small | Establishment fee only | Higher rate over 1 to 7 years; Unloan's example shows $30,000 at 10% over 5 years costs about $8,250 in interest, against about $21,600 at 6% over 20 years |
What do lenders publish on cash-out and loan increases?
Checked against each lender's published page on 20 September 2026; "Not published" means the page does not state it. Policies change without notice, so confirm before relying on them.
| Lender | LVR line | Purpose and evidence | Fees and valuation | Other published terms |
|---|---|---|---|---|
| Unloan | At or below 80% LVR after drawdown; $800,000 home, $400,000 owing, $240,000 available | Purpose asked; quotes or evidence of debts may be required | No fees of its own; registry fees $130 to $250 each, twice, by state; old lender may charge an exit fee | Cash-out assessed more closely than a standard refinance; valuation arranged in the application |
| Westpac | 80% of current value; beyond 80% with LMI | Renovation, debt consolidation, investment named; tax advice recommended for investors | Covers the first valuation for a top-up | Pays consolidated debts directly on approval; increases on variable loans, separate account on fixed; supplementary loan option |
| CommBank | Usable equity at 80% ($750,000 home, $400,000 owing, $200,000) | Not published | LMI may apply depending on amount and valuation | Fixed and guaranteed-rate loans cannot be increased without breaking the contract |
| ME Bank | Up to 80% of property value | Business purposes excluded | Valuation may be required, fees may apply | Minimum top-up $20,000; not on fixed or StandardME loans |
| IMB | Not published | Not published | Valuation may be required, a fee may apply | Minimum top-up $10,000; not on fixed loans without break costs |
| ANZ | LVR determines eligibility | Renovate, consolidate debts, buy a car named | Fees and charges apply | Supplementary Loan route; call back in 1 to 3 business days |
| Bankwest | Depends on equity | Renovating, upgrading, investment named | One standard valuation free; one-off application fee may apply by product | Term can stay the same or be reset on the increase |
How is a cash-out application assessed?
In this order: valuation, then serviceability, then purpose. The valuation decides the 80% line and is the most common reason a cash-out comes in below what you expected; ask your broker what comparable sales the valuer is likely to use before you apply. Serviceability is the same buffered test as a new loan on the full new balance. Purpose is the check that a plain refinance does not have: what the money is for and, where the lender asks, the paperwork behind it. A broker knows which lenders take which purposes and which have the friendliest valuation panels, and Your Finance Guide refers you to one licensed broker partner for that; we do not lend or assess applications ourselves.
Equity and refinancing guides
The other routes, the costs and the calculators.
Cash-out refinance FAQs
Is it ever a good idea to do a cash-out refinance?
What are the rules for a cash-out refinance?
Is it hard to qualify for a cash-out refinance?
How much does it cost to refinance a $300,000 loan?
Cash-out refinance or a top-up with my current lender?
Does a cash-out refinance affect my tax?
How long does a cash-out refinance take?
Can I cash out above 80% LVR?
Refinance and release equity in one move
Tell us the amount and the purpose, and we refer you to one licensed broker partner who compares a cash-out refinance against a top-up on total cost, checks the valuation and purpose first, and lodges one application. Free for borrowers, no obligation.