Do you know Equity Can Fund University or TAFE Costs?

If you have built up equity in your home and need to fund education costs for yourself or a family member, refinancing to access that equity lets you spread the expense over time without touching your savings or running up high-interest debt.

Why Refinancing for Education Expenses Makes Sense

Refinancing to access equity converts a portion of your property value into cash, which you can use for university fees, TAFE courses, or other education-related expenses. The borrowed amount is added to your loan balance and repaid at your home loan rate, which is typically much lower than credit card or personal loan rates. In our experience, Department of Home Affairs employees with stable employment and steady property growth in Canberra or other capital cities often have usable equity within a few years of purchase. The process involves a property valuation, a loan application that accounts for the increased borrowing, and a settlement where the additional funds are released to you. If your current lender offers a suitable rate and features, you may be able to access equity without switching lenders, though a full home loan refinance often opens up options for improved rates or features at the same time.

How Much Equity Can You Access for Education?

Most lenders allow you to borrow up to 80 percent of your property value without paying lenders mortgage insurance. If your home is valued at $700,000 and you owe $450,000, you have $250,000 in total equity, but can only access around $110,000 without triggering additional insurance costs. That calculation is based on the 80 percent threshold, which puts your maximum borrowing at $560,000, minus your existing loan balance. If you need to borrow beyond 80 percent, lenders mortgage insurance will apply, though some Department of Home Affairs employees may qualify for an LMI waiver depending on their role and lender policy. The amount you choose to access should align with the education costs you need to cover, whether that is a single year of domestic tuition, multiple years of fees, or related expenses such as accommodation or study materials.

Using Equity to Fund a Degree Without Disrupting Cashflow

Consider a Department of Home Affairs employee in Canberra who owns a property valued at $650,000 with a loan balance of $420,000. They need to fund a postgraduate degree for their partner, which costs $35,000 over two years. Rather than drawing down savings or taking out a personal loan at a higher rate, they refinance and increase their loan balance to $455,000. The additional $35,000 is released at settlement, allowing them to pay the tuition in full or in instalments without affecting their household budget. Their monthly repayment increases, but the impact is manageable because the additional borrowing is spread over the remaining loan term and charged at their home loan rate. This approach preserves their savings, avoids high-interest debt, and keeps their cashflow stable while covering a significant expense.

Refinancing to Access Equity vs Redrawing From Your Existing Loan

If your current loan has a redraw facility and you have made extra repayments, you may be able to withdraw those funds without refinancing. Redraw accesses money you have already paid ahead, so it does not increase your loan balance or require a new application. However, redraw is only available if you have built up a surplus, and some lenders restrict how much you can withdraw or charge fees for the transaction. If you do not have enough in redraw or your loan does not include that feature, refinancing to access equity is the alternative. A full refinance also gives you the opportunity to review your rate, switch between variable and fixed, or consolidate other debts, which can make the process more useful than a standalone equity release.

Should You Fix or Keep Your Loan Variable After Refinancing?

When you refinance to access equity, you can choose to keep your loan on a variable rate, lock in a fixed rate, or split the loan across both. A variable rate gives you flexibility to make extra repayments and access features such as offset or redraw, which can reduce the interest you pay over time. A fixed rate provides certainty around your repayment amount, which can be useful if you want to manage your budget tightly after increasing your loan balance. Some Department of Home Affairs employees split their loan, fixing a portion to lock in a known repayment and leaving the rest variable to retain flexibility. Your decision should reflect how much certainty you need, whether you plan to make extra repayments, and whether you expect rates to move in either direction.

Tax Treatment of Equity Used for Education

If you access equity to fund education, the interest on that portion of your loan is generally not tax deductible unless the study is directly related to your current employment and improves your skills or income-earning capacity. For example, if you are funding a degree that qualifies you for a promotion or a role change within your department, you may be able to claim a portion of the interest as a self-education expense, but you should confirm this with your accountant. If you are funding education for a family member or a course that does not relate to your current work, the interest is treated as personal debt and is not deductible. The Australian Taxation Office has specific rules around what qualifies as self-education, and those rules are stricter than many borrowers expect.

What the Refinance Process Involves for Department of Home Affairs Employees

The refinance application requires proof of income, typically your most recent payslips and a letter of employment. Because Department of Home Affairs roles are salaried and considered stable, most lenders view your income favourably. You will need to provide details of your existing loan, any other debts, and your living expenses. The lender will arrange a property valuation, which determines how much equity is available. If the valuation meets or exceeds your expectation, the lender will process your application and prepare settlement. The entire process usually takes three to five weeks, depending on how quickly documents are provided and how long the valuation takes. If your valuation comes in lower than expected, you may need to adjust the amount you are borrowing or contribute additional funds to meet the lender's loan-to-value ratio requirements.

Should You Refinance Now or Wait Until Rates Drop?

If you need the funds for an upcoming education expense, waiting for rates to drop may not be practical. Tuition deadlines, enrolment dates, and course start times do not move, and delaying your refinance to chase a rate prediction can mean missing the opportunity altogether. If you refinance now and rates fall later, you can always refinance again or switch to a lower rate with your existing lender, depending on the terms of your loan. If your current loan has a fixed rate period ending soon, refinancing to access equity at the same time you come off your fixed term can be efficient, as you avoid break costs and consolidate the process into a single application. A loan health check before you refinance helps you understand whether your current rate and features are competitive, and whether switching lenders or staying put makes more sense for your circumstances.

Call one of our team or book an appointment at a time that works for you. We work with Department of Home Affairs employees across the country and can structure a refinance that releases the equity you need while keeping your loan settings aligned with your household and career plans.

Frequently Asked Questions