Refinancing to access equity can cover education costs without requiring you to liquidate investments or drain savings accounts.
Burwood sits within the Whitehorse Local Government Area, where demand for private schooling and tertiary education runs high. Properties in the suburb have performed consistently over the past decade, which means many homeowners now hold substantial equity. If you purchased in Burwood five or ten years ago, your property value has likely increased enough to support a refinance that releases funds for education without forcing you to sell or disrupt long-term financial plans.
The decision to refinance for education differs from refinancing to reduce your interest rate or consolidate debt. You are borrowing against the value your property has accumulated, increasing your loan balance in exchange for immediate access to capital. This works when the equity available exceeds the costs involved and when servicing the higher loan amount does not compromise your ability to meet repayments.
How Equity Release Works When You Refinance
You can typically borrow up to 80% of your property's current value, minus what you still owe on your existing mortgage. The difference is the usable equity you can access through a refinance. If your home is valued at $1.4 million and your outstanding loan balance is $600,000, you have $1.12 million in total equity. At 80% of the property value, you could borrow up to $1.12 million, which leaves $520,000 in accessible equity before lenders mortgage insurance applies.
Most lenders structure this as a cash-out refinance, where your new loan replaces the old one and the additional funds are released at settlement. Those funds are not restricted. You can direct them toward school fees, university accommodation, overseas exchange programs, or tutoring without needing to justify each expense to the lender after approval.
Timing the Refinance Around School Fee Schedules
Private school fees in the Whitehorse area range from $15,000 to $40,000 per student per year depending on the institution and year level. Families with multiple children often face annual education costs exceeding $80,000 once extracurricular programs and capital levies are included. Refinancing in advance of the school year allows you to pay fees upfront, which some schools reward with a modest discount.
Consider a scenario where a Burwood family needs $120,000 to cover three years of secondary school fees for two children. Rather than drawing from an offset account that reduces the interest charged on their mortgage, they refinance to release equity. The $120,000 is added to their loan balance, but their monthly repayment increases by approximately $700 based on current variable rates. They preserve the offset balance, maintain liquidity for other expenses, and avoid selling investments that may be performing well.
University Costs and Equity Access
Tertiary education expenses extend beyond HECS-HELP. Accommodation near the University of Melbourne or Monash University, whether in colleges or private rentals, can cost $20,000 to $35,000 per year. If your child is studying interstate or overseas, those figures rise further. Add textbooks, travel, and living expenses, and a three-year degree can require $100,000 or more in out-of-pocket support.
Refinancing to access equity provides a lump sum that can be staged across the degree duration. Some families release the full amount at the start and place it in a high-interest savings account or offset facility, drawing down as needed. Others refinance annually to match the funds released with the year's expenses, which keeps the loan balance lower in the early years but requires multiple applications and valuations.
Burwood's proximity to Deakin University's Burwood campus makes it a practical location for families supporting students locally while living at home. Even in those cases, course fees for certain postgraduate programs, particularly in medicine or law, can justify equity release if the alternative is high-interest personal lending or credit card debt.
Tax Treatment and Loan Structure
Interest on funds borrowed for education is not tax-deductible unless the education directly relates to your current income-earning activities. If you refinance to fund your child's schooling, the interest on that portion of the loan is a personal expense. Some borrowers separate the education drawdown into a split loan, which keeps the original mortgage and the equity release as distinct facilities. This does not change the deductibility, but it does clarify reporting and makes it easier to track repayments if you later refinance again for investment purposes.
A split structure also allows you to fix the rate on the education component if you want certainty around repayments while leaving the remainder on a variable rate with an offset account. This is particularly relevant if you are still working and accumulating savings that reduce interest on the variable portion.
Costs Involved in Refinancing for Equity
Refinancing triggers valuation fees, application fees, discharge fees from your current lender, and sometimes settlement costs if your state charges mortgage registration fees. In Victoria, expect to pay between $3,000 and $5,000 in total costs for a straightforward refinance. If your loan balance exceeds 80% of the property value after the equity release, lenders mortgage insurance will apply, which can add tens of thousands of dollars depending on the loan size and LVR.
Some lenders waive application fees or offer valuation rebates to attract refinance customers, but discharge fees from your existing lender are unavoidable. These typically range from $300 to $500. Factor these costs into your decision, particularly if the amount you are releasing is relatively modest. Refinancing to access $30,000 for a single year of fees may not justify the expense if your current loan structure is already performing well.
When Refinancing Does Not Make Sense
If your property value has not increased significantly since you purchased, or if you have recently refinanced and your loan balance is already high relative to the property value, you may not have sufficient equity to access without triggering lenders mortgage insurance. In those cases, a personal loan or education-specific lending may be more appropriate, even if the interest rate is higher, because the approval process is shorter and the fees are lower.
Refinancing also delays access to funds. From application to settlement, expect four to six weeks in most cases. If school fees are due within a fortnight, refinancing is not a viable solution unless you have already started the process. Some lenders offer bridging arrangements, but these come with additional cost and complexity.
Frequently Asked Questions
How much equity can I access when refinancing for education costs?
You can typically borrow up to 80% of your property's current value, minus your outstanding loan balance. Borrowing above 80% may trigger lenders mortgage insurance, which adds significant cost to the transaction.
Is interest on a loan for education expenses tax-deductible?
Interest on funds borrowed for personal education expenses is not tax-deductible unless the education directly relates to your current income-earning activities. Most family education costs do not meet this threshold.
How long does it take to refinance and access equity?
From application to settlement, refinancing typically takes four to six weeks. If you need funds urgently, refinancing may not be fast enough unless you have already begun the process.
What costs are involved in refinancing to release equity?
Expect to pay valuation fees, application fees, discharge fees from your current lender, and settlement costs, totalling between $3,000 and $5,000 in most cases. Lenders mortgage insurance applies if your loan-to-value ratio exceeds 80%.
Can I refinance to access equity if I recently bought my property?
If your property value has not increased significantly since purchase, you may not have sufficient equity to access without paying lenders mortgage insurance. In that case, alternative lending options may be more suitable.
