Home Equity Calculator

Equity is worked out by taking your property value and subtracting what you still owe on any home loans. A bank uses its own valuation to do this. It might be less than what a real estate agent says your property is worth. 

For example, if you:  

• Have a property valued at $850,000  
• Owe $500,000 on the property 

You’ll have about $350,000 in equity.  

You may be able to access a part of this amount, that part is your usable equity. Get a quick idea of your equity by using the calculator. 

Usable equity refers to the portion of equity that you have in a property that you can use. In most cases it’s 80% of the value of the property minus what you owe on your loan balance. 

Example: If your home is worth $800,000 and you still owe $440,000 in loans, this means your usable equity is $200,000.  

Here’s how to work it out:  

• First, find 80% of your home’s value. 80% x $800,000 = $640,000 
• Next, take away the amount you owe. $640,000 - $440,000 = $200,000 

You may be able to use this amount as a: 

• Home loan increase  
• Line of credit secured against your usable equity. 

Lenders also check if you can repay the loan. Even if you have a certain amount of usable equity, you might only be able to access part of it. This will be the case if your income and expenses don’t support borrowing the full amount. 

Homeowners often use equity to:  

• Purchase a new property by using it as a deposit 
• Renovate their current home 
• Invest in shares, bonds, mutual funds or similar financial instruments
• Pay off other debts like loans or credit card bills 
• Cover major expenses, such as medical bills, education or a new car 
• Fund lifestyle expenses such as a holiday. 

Keep in mind that your bank may have limits and conditions for how you can use your equity. These can change depending on what you want to use the money for. If you use equity to pay off other debts, your home loan could take longer to pay back. This may mean you pay more interest over time than if you paid off those debts on their own. 

Using equity can be helpful for big expenses because home loan rates are usually lower than other types of loans. But if you use equity for short-term needs or projects, your loan term may get longer. This could mean you end up paying more interest than you would with a personal loan that has a set end date. 

Most lenders will ask you to show proof of your financial situation. They’ll also want to know how you plan to use the money. This helps them understand how much you can borrow and ensures the money is being used responsibly. 

Learn more about how to unlock equity here. 

There are some ways to grow your home equity. The most obvious is to make extra repayments on any home loans. This helps you pay off your loan(s) faster and increases the part of the property you own. If you’re on a fixed rate loan, remember there’s a limit to how much extra you can repay before you may be charged break costs.

You could also increase your equity by improving your property. This could include renovations, extensions or small upgrades. You could even use the equity you already have to help pay for these improvements, which can then build even more equity. 

Sometimes equity grows on its own if your property’s value goes up. This happens when property prices rise. While this isn’t something you can control, it can help to think about where prices are most likely to increase when you’re researching and buying property.

How do break costs work? 

When you refinance your home loan to access equity, you’re basically increasing your debt. It could lead to increased repayments or a longer loan term – or both. This means you might end up paying more interest in the long run. 

You should also think about where the money is going. Is it an investment that will pay for itself over time? Or a purchase that may see depreciation over time? It’s important to weigh up the pros and cons of different scenarios before making a decision. 

It’s also best to think beyond the short term. You need to be able to sustain the monthly repayments if interest rates go up in the future. There are also fees and costs attached to home equity loans to factor in too. 

Have any other questions? Explore our home loan products or request a call back to talk to your local home loan specialist.