Home Equity Calculator Australia
Your home may be hiding your next deposit: total equity is value minus loan, but the bank will usually only let you touch 80% of value minus loan — the usable part.
Work out how much equity you have and how much of it you can actually access: type your property value and loan balance to see total equity, usable equity at the standard 80% no-LMI ceiling, and your current LVR. Then test the LMI zone at 85–90%, see how a change in property value leverages your equity, and check whether usable equity covers a 20% deposit plus costs on an investment property. Estimates only — not financial advice.
Standard lender conventions: 80% LVR no-LMI ceiling; ~25% of purchase price for a deposit plus costs. Estimates only — not financial advice.
📐 How it worksHow to calculate home equity — and why the bank's number is smaller than yours
Two formulas, two very different numbers
Total equity is simple arithmetic: property value minus loan balance. On the calculator's defaults — a $900,000 home with a $550,000 loan — that's $350,000. But you can't borrow against all of it. Usable equity is what lenders will typically let you access without lenders mortgage insurance: 80% of the property value, minus the loan. Here that's $720,000 − $550,000 = $170,000. The remaining $180,000 — exactly 20% of the value — stays locked in the home as the lender's buffer.
| Property value | Loan balance | LVR | Total equity | Usable equity (80%) |
|---|---|---|---|---|
| $700,000 | $400,000 | 57.1% | $300,000 | $160,000 |
| $900,000 | $550,000 | 61.1% | $350,000 | $170,000 |
| $1,200,000 | $600,000 | 50% | $600,000 | $360,000 |
| $800,000 | $680,000 | 85% | $120,000 | $0 |
The last row is the trap worth noticing: at 85% LVR you still have $120,000 of total equity on paper, but $0 usable — the loan already sits above the 80% line, so there's nothing to access without paying LMI. Your LVR (loan ÷ value — 61.1% at the defaults) tells you instantly which side of that line you're on; the LVR Calculator goes deeper on the ratio itself.
Equity grows from both ends
Every principal repayment lowers the loan, and every dollar of price growth lifts the value — equity builds from both directions at once, which is why it often grows faster than people expect. The chart above draws the split live: loan, usable equity, and the locked 20% buffer always sum to your property's value.
🔓 The 80% lineWhy banks stop at 80% — and what 85–90% really costs
The 20% buffer is the lender's shock absorber
Lenders cap standard lending at 80% of the property's value because it leaves room for prices to fall without the loan exceeding what the home would sell for. Below 80% LVR the lender wears essentially no realistic loss, so no insurance is needed. Above it, they'll usually still lend — often to 90%, sometimes 95% — but they charge lenders mortgage insurance (LMI) to cover the extra risk. LMI protects the lender, not you, and the premium generally scales with both the loan size and how far above 80% you go.
| Target LVR | Lending ceiling | Usable equity | LMI? |
|---|---|---|---|
| 80% | $720,000 | $170,000 | No |
| 85% | $765,000 | $215,000 | Usually yes |
| 90% | $810,000 | $260,000 | Yes |
Each 5% step above the line unlocks another $45,000 at these defaults (5% of $900,000) — but the LMI premium eats into it, and the bigger loan raises your repayments. Sometimes paying LMI to move sooner is a deliberate, reasonable choice; it should just never be an accidental one. Price the premium with the LMI Calculator before deciding.
📈 LeverageWhy a 5% price move changes your equity by 12.9% — the leverage effect
Your loan doesn't move, so equity takes the whole swing
When your property's value changes, the loan balance stays put — so all of the change lands on your equity. At the defaults, a +5% rise adds $45,000 of value, lifting total equity from $350,000 to $395,000 — a +12.9% jump. The multiplier is value ÷ equity: $900,000 ÷ $350,000 ≈ 2.6×. The higher your LVR, the bigger the multiplier — and it cuts both ways.
| Value change | New value | Total equity | Equity change | Usable equity (80%) |
|---|---|---|---|---|
| −10% | $810,000 | $260,000 | −$90,000 (−25.7%) | $98,000 |
| −5% | $855,000 | $305,000 | −$45,000 (−12.9%) | $134,000 |
| No change | $900,000 | $350,000 | — | $170,000 |
| +5% | $945,000 | $395,000 | +$45,000 (+12.9%) | $206,000 |
| +10% | $990,000 | $440,000 | +$90,000 (+25.7%) | $242,000 |
Notice usable equity moves even harder than total equity: the −10% row cuts it from $170,000 to $98,000 — a 42% fall from a 10% price dip, because the 80% ceiling drops with the value while the loan doesn't. Set the calculator to Detailed and type any percentage (negative numbers welcome) to run your own scenario. For multi-year growth projections, the Capital Growth Calculator compounds it properly.
🏘️ InvestUsing equity as an investment property deposit — the 25% rule of thumb
Deposit + costs ≈ 25% of the purchase price
The classic use of usable equity is seeding the next purchase: instead of saving a cash deposit, you borrow against the equity in your home. To avoid LMI on the new property you want a 20% deposit, plus roughly 5% for stamp duty, legal and other purchase costs — about 25% of the price all up. Flip that around and your usable equity supports a purchase price of about usable equity ÷ 0.25:
| Usable equity | Max purchase price | 20% deposit | ~5% costs |
|---|---|---|---|
| $100,000 | $400,000 | $80,000 | $20,000 |
| $170,000 | $680,000 | $136,000 | $34,000 |
| $250,000 | $1,000,000 | $200,000 | $50,000 |
At the defaults, $170,000 of usable equity supports a purchase up to about $680,000. The Advanced planner runs this live: enter a target price and it shows the deposit-plus-costs needed (25% of the price) against your usable equity, with the surplus or shortfall. Two caveats: actual stamp duty varies by state and price bracket, and — the big one — you must be able to service both loans. Equity supplies the deposit; your income has to carry the debt. Sanity-check that with the Borrowing Capacity Calculator and the expected rent with the Rental Yield Calculator.
🔑 AccessHow you actually get at equity — top-up, refinance, and why redraw and offset aren't it
Three real routes
Accessing equity always means new borrowing secured against your home. The usual structures: a loan top-up (your existing lender increases the limit on your current loan), a refinance (a new loan, often with a new lender, large enough to pay out the old one and release cash), or a separate equity loan / line of credit that sits alongside the original loan. In every case the lender revalues the property, applies the 80% (or LMI-priced higher) ceiling, and assesses whether your income can service the bigger debt.
Redraw and offset are not equity access
Two things are often confused with equity release. Redraw only returns extra repayments you've already made on the loan — it's your past overpayments coming back, capped at whatever you're ahead by, not new lending against the property's growth. An offset account is simply your own savings parked against the loan to cancel interest; withdrawing it changes nothing about the loan balance or your equity. Neither requires approval — precisely because neither is new borrowing.
The bill: bigger loan, bigger repayments
However it's structured, drawing on equity raises your total debt, so repayments rise with it — there's no free money in the walls. Before signing, price the new repayment with the Mortgage Repayment Calculator and make sure it still fits if rates move against you.
❓ FAQFrequently asked questions
How do I calculate my home equity?
Total equity is your property's value minus your loan balance: on a $900,000 home with a $550,000 loan, total equity is $350,000. Usable equity is what a bank will typically let you access without lenders mortgage insurance: 80% of the value minus the loan — $720,000 minus $550,000 = $170,000 in the same example.
What is the difference between equity and usable equity?
Total equity ($350,000 in the example) is the accounting figure — value minus loan. Usable equity is smaller because lenders will generally only lend up to 80% of the property's value without lenders mortgage insurance, keeping a 20% buffer locked in the home. At a $900,000 value that buffer is $180,000, leaving $170,000 usable of the $350,000 total.
How do I access the equity in my home?
The common routes are a loan top-up (increasing your existing loan), refinancing to a new loan with a higher limit, or a separate equity loan or line of credit. Redraw is different: it only returns extra repayments you've already made on the loan. An offset account is different again — that's your own savings sitting against the loan, and withdrawing it doesn't change your loan balance. Lenders assess your income and expenses before approving any of these.
Can I use home equity to buy an investment property?
Yes — usable equity is commonly used as the deposit plus purchase costs on an investment property. A common rule of thumb is that you need about 25% of the purchase price: a 20% deposit plus roughly 5% for stamp duty and other costs. On that basis, $170,000 of usable equity supports a purchase price of up to about $680,000 ($136,000 deposit plus $34,000 costs). You still need the income to service the larger total debt.
Does accessing equity increase my repayments?
Yes. Accessing equity means borrowing more, so your total loan balance rises and your repayments rise with it — whether it's a top-up, a refinance or a separate loan. Before drawing on equity, check the new repayment fits your budget and that you could still service the debt if rates rose.
What if I want to borrow above 80% LVR?
Lenders will often lend up to 90% or even 95% of a property's value, but above 80% LVR you generally pay lenders mortgage insurance (LMI), which protects the lender, not you. At this calculator's defaults, moving the target from 80% to 90% lifts usable equity from $170,000 to $260,000 — but the extra borrowing usually comes with an LMI premium. Use the LMI Calculator to estimate that cost.
How is my property's value decided when I access equity?
The lender orders its own valuation, which can be a desktop (data-only) estimate, a kerbside inspection or a full on-site valuation. Bank valuations are often more conservative than online estimates or agent appraisals, and the lender's valuation — not your own figure — sets how much equity you can access. If you believe the valuation is low, you can ask for a full valuation or provide comparable recent sales.
What is negative equity?
Negative equity is when your loan balance is higher than your property's value — for example a $600,000 loan on a property now worth $560,000. Your usable equity is zero and refinancing is difficult. It usually only bites if you have to sell; continuing to make repayments while the market recovers is the common path through it.
Does having equity guarantee the bank will lend to me?
No. Equity is only the security side. Lenders also assess serviceability — whether your income comfortably covers the bigger repayments after expenses and a rate buffer. Plenty of equity with insufficient income still means no. Use the Borrowing Capacity Calculator to look at the income side.