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How to unlock equity in your home

The equity you have in your home can open the door to additional funds. Find out how you can unlock this for a home renovation, to buy a second property or use it for other things.

What is your home equity?

Equity is the difference between the current market value of your property and the amount remaining on your home loan. As you pay off your home loan, the equity you have in your home grows, and if the property’s value increases, your equity will go up as well.


For example, if you buy a house for $450,000, with a deposit of $100,000 and a loan of $350,000 – you have equity of $100,000 in the house.

If the property’s value increases to $600,000 and you’ve repaid $150,000 on the loan, you now have a $600,000 property, minus your $200,000 home loan balance still to pay. This means your equity in the house has risen to $400,000.


Before you work out how much equity you have in your home, research recent sales in the market and get a sense for how much your property could go for if you listed it today.


You can use our property market research tool to get a sense of the value of your current address and check out recent sales of similar properties in the area. 


How usable equity allows you to borrow

Your useable equity is the amount of equity in your home you can access and use. A bank will typically lend you up to 80% of a property’s market value. Subtract from that the amount you owe on your home loan and the remainder is your useable equity.


Once you have a reasonable idea of your home’s potential market value, it’s time to work out how much usable equity you can access with a loan increase or supplementary loan.


So, using the example above, 80% of the current market value of your home is now $480,000. You owe $200,000, therefore your usable equity is $280,000.


Understanding your usable equity will give you a clearer picture of the funds you might be able to access – and you can start planning how you’ll use them.


Our equity calculator can help give you an idea of the potential usable equity in your home, based on current market data.


Make renovations, buy another property or something else?

The usable equity in your home gives you options. You could access it to fund a renovation, maybe upgrade bathrooms or a kitchen, or build an addition to your home. Renovating your home can increase its market value.


You could also use it to top up your current home loan if you wanted to consolidate debt into one loan, or even buy a new car. The choice is yours.


Maybe you want to access your usable equity to start to invest in property. Building an investment property portfolio can help you accumulate wealth as your property grows in value, and provide you with a rental income stream. 


Our lenders love to help!

Book an appoinment

A dedicated lender will get back in touch with you within 1 business day. They’ll answer your questions about investment property home loans and guide you through next steps. Your lender will be able to start the application for you.

Book an appoinment

Avoiding negative equity

Equity works both ways, meaning if your property value falls, it impacts the equity of your home. If market conditions go against you, it’s possible your market value will sink below the balance in your home loan. But you can take steps to offset any effects of this – check out our guide on negative equity for more.

Boost your regular repayments

By increasing what you repay each month, you could quickly increase your equity, reducing the impact of any market fluctuations.

Make one-off contributions

If you’ve been fortunate and received a windfall or you just have some extra cash, it could be wise to use some of it to repay a portion of your home loan, which will help boost your equity in the property. 


Refinance your home loan

Once you understand the property value and your potential usable equity, assess your options again. You might want to check if the terms your current home loan -  such as the type of loan and interest rate – still suit your needs and plans.

If your home loan doesn't meet your current needs, you might consider refinancing your home loan, which involves moving your  loan to another lender, to potentially get a better rate and features. If the hassle of moving banks is too great to think about, it’s worth chatting to your current lender’s retention team to see if they can help by improving your loan terms.

You might also check whether your home loan has a redraw facility, which allows you to redraw any extra home loan repayments you make, or if you can attach an offset account to your home loan.  These features can help you reduce the principal on your home loan faster, which could have positive effects on your equity over time. 


To sum up

  • Using the equity in your home can unlock funds for home improvements or property investment
  • Our equity calculator can assist you to work out the usable equity you currently have in your home
  • To access your usable equity, first get a bank valuation of your property
  • Assess your home loan to check it’s right for you
  • If you’re looking to buy, our property report tool can help you to research


Take the next step

If you’ve worked out how much usable equity you might have and you’d like to discuss your home loan options, we’re happy to help.  Find out more by requesting a call back from one of our lenders or call us on 132 558.


Other guides to help

Should you keep, sell or renovate?

It’s a tough decision that comes down to your personal circumstances and what’s happening in the market. Take a look.


Using equity to renovate your home

You might be able to fund your renovation with a home loan increase, but there are aspects you should consider carefully.


6 things to look out for in an investment property

Some handy questions you should ask before you invest in a property.


Things you should know

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice. Credit provided by Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

Key Fact Sheet for Home Loans