Calculate your usable equity and potential borrowing power for a home equity loan or line of credit.
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Home equity is the part of your home that you truly own. It’s calculated by taking the current value of your home and subtracting what you still owe on your mortgage.
For example, if your home is worth $600,000 and you owe $400,000, your home equity is $200,000. As you pay off your mortgage or if your home’s value increases, your equity can grow.
New survey data from Money.com.au reveals that 19% of Aussies don’t really understand equity and wouldn't be able to explain the financial concept to someone else.
Homeowners use their equity for different reasons. You might tap into it to pay for a home upgrade with a renovation loan, consolidate debts, or finance a second mortgage or investment property. This is usually achieved through a home equity loan or a line of credit, which allows you to borrow money based on your home’s equity.
However, as we'll discover below, you usually cannot tap into all of your equity. Instead, lenders consider your 'usable equity'.
A home equity loan is a type of mortgage that allows you to borrow money using the equity in your home as collateral. Essentially, you take out a loan based on the difference between your home’s current value and the amount you owe on your mortgage.
When Australians refinance their home loans, owner-occupiers typically have more equity than investors. According to Money.com.au’s analysis of over 20,000 home loan enquiries from 2025, owner-occupiers had an average equity of $573,725, while investors held an average of $449,550.
Usable equity refers to the amount of equity you can actually access for borrowing, while equity is simply the total value you own in your home.
For instance, if your home is worth $700,000 and has $300,000 in equity, not all of that may be available to use. Lenders typically allow you to borrow up to 80% of your home’s value, minus what you still owe on your mortgage.
In this case, your usable equity would be calculated as $560,000 (80% of the property value) minus $400,000 (your mortgage balance), giving you $160,000 in usable equity.
Property value | $400,000 |
|---|---|
Mortgage balance | $300,000 |
Home equity | $100,000 |
Usable equity | $20,000 |
Property value | $600,000 |
Mortgage balance | $400,000 |
Home equity | $200,000 |
Usable equity | $80,000 |
Property value | $800,000 |
Mortgage balance | $500,000 |
Home equity | $300,000 |
Usable equity | $140,000 |
Property value | $1,000,000 |
Mortgage balance | $600,000 |
Home equity | $400,000 |
Usable equity | $200,000 |
Property value | $1,200,000 |
Mortgage balance | $700,000 |
Home equity | $500,000 |
Usable equity | $260,000 |
Property value | $1,400,000 |
Mortgage balance | $800,000 |
Home equity | $600,000 |
Usable equity | $320,000 |
| Property value | Mortgage balance | Home equity | Usable equity |
|---|---|---|---|
$400,000 | $300,000 | $100,000 | $20,000 |
$600,000 | $400,000 | $200,000 | $80,000 |
$800,000 | $500,000 | $300,000 | $140,000 |
$1,000,000 | $600,000 | $400,000 | $200,000 |
$1,200,000 | $700,000 | $500,000 | $260,000 |
$1,400,000 | $800,000 | $600,000 | $320,000 |
As shown in the table above, the amount of usable equity can vary greatly based on your property’s value and how much equity you’ve built up. This usable equity can be used for various financial needs, such as paying off credit card debt, making home improvements, or purchasing an investment property.
To use our home equity calculator, simply enter the estimated value of your home, your current mortgage balance and the loan-to-value ratio (LVR) required by your lender. Once you've entered these details, our calculator will display your home equity amount.
You can use equity to buy an investment property or a second home without needing a deposit. This is usually done by borrowing against your equity through a refinance. This process, called a top-up loan, involves increasing your current home loan limit, giving you the money you need to buy the new property.
Alternatively, a line of credit lets you withdraw funds up to an approved limit based on your home equity, and you only pay interest on the amount you’ve actually withdrawn.
Here are five key factors that can influence the calculation of your home equity:
