Home Equity Calculator

How usable equity is calculated

Take 80% of your property's value and subtract what you still owe. That's the amount most lenders will release without Lenders Mortgage Insurance. For example, a home worth $950,000 with a $480,000 loan has $470,000 of raw equity but roughly $280,000 of usable equity at 80% LVR.

Equity is only half the test

Lenders assess two things: security (do you have enough equity?) and serviceability (can you afford the bigger repayment, tested at roughly 3% above the actual rate?). Plenty of homeowners are equity-rich but fail on servicing — which is where structuring the loan correctly, or choosing a lender with a more generous assessment, makes the difference.

Smart ways to use equity

• Renovate — often adds more value than it costs, and stays at home loan interest rates.
• Buy an investment property — use equity as the deposit rather than saving cash again.
• Consolidate debt — replace 15–20% credit card interest with home loan rates, but keep the term short so you don't pay more overall.
• Landscaping and outdoor work — a common cash-out purpose that lenders will fund with quotes.

Structuring matters

Released equity is usually set up as a separate split or sub-account rather than mixed into your existing loan. That keeps investment-purpose borrowing clearly separated from owner-occupier debt, which makes tax reporting far cleaner if the funds are used to invest.