Equity Release › What are the risks of releasing equity?

What are the risks of releasing equity?

The main risks are borrowing more than you need, higher repayments, and using the funds for things that do not build value. Releasing equity also reduces the buffer in your home, so it should serve a clear, sensible purpose.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

Equity release is a tool, and like any borrowing it carries risk if used carelessly. Drawing equity for lifestyle spending erodes your wealth, while a productive purpose can build it. Higher repayments must fit your budget, and leaving some equity untouched gives you a safety margin. A clear plan keeps the risk in check.

The key points

You can borrow more than you actually need.
Repayments rise and must fit your budget.
Spending it on non-productive things erodes wealth.
Leaving a buffer protects you.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.