Home equity calculator
Your property and loan
Lenders use their own valuation, not your estimate. If you have money in an offset account it reduces interest but not the loan balance used for LVR unless you repay it.
Summary
If used as an investment deposit
Equity sets the deposit. Whether you can service the combined debt is a separate test; run the borrowing power calculator on the total.
Want a real usable-equity check?
A licensed broker partner can confirm the valuation range, the LVR line at each lender, and whether a top-up, split loan or cash-out refinance is the cheaper route for your purpose.
How the equity calculator works
Equity is the property's value minus every loan secured by it. Lenders will not let you borrow all of it: the line most of them publish is a loan-to-value ratio of 80% after the new borrowing, so usable equity is 80% of the value minus the balance. NAB and ING both publish the same worked example, a $400,000 home with $220,000 owing, where 80% of the value is $320,000 and the usable equity is $100,000. Above 80%, some lenders go to 90% with lenders mortgage insurance, which is why the calculator shows both figures; the LMI calculator estimates the premium.
The investment figures use two published rules of thumb. NAB's rule of four says usable equity supports a purchase price of about four times its amount, because it covers a 20% deposit plus about 5% in costs. ING's guide is borrowing up to five times usable equity. Both describe the deposit; serviceability on the combined debt decides whether a lender will fund the purchase, and the equity to buy an investment property guide works through a full example.
What to do with the number
Read the home equity loan guide for the four routes to your equity, the top-up guide if you want to stay with your lender, and the cash-out refinance guide if you are switching anyway. The valuation is the number that moves: lenders use their own, and a broker can tell you the likely range from comparable sales before anything is lodged.
Related guides and calculators
Home equity calculator FAQs
How much can I borrow based on equity?
Usually up to the point where your total home loan is 80% of the property’s value. Usable equity is 80% of the value minus what you owe: on a $400,000 home with $220,000 owing, 80% is $320,000, so usable equity is $100,000, the example NAB and ING both publish. Some lenders go to 90% with lenders mortgage insurance. Your income then has to service the larger loan, which is the other limit.
How is home equity calculated?
Equity is the lender’s valuation of the property minus the balance of every loan secured by it. Usable equity is 80% of that valuation minus the loan balance. The valuation is the bank’s figure, not your estimate or a recent sale next door, so the number this calculator gives from your own estimate is a starting point until a valuer has been through.
What is the rule of four?
NAB’s published rule of thumb for buying with equity: usable equity of $100,000 supports a target purchase price of about $400,000, because it covers a 20% deposit ($80,000) plus about 5% for purchase costs. ING publishes a similar rule of borrowing up to five times your usable equity. Both are guides to the deposit, not to serviceability.
How much would an $80,000 home equity loan cost per month?
At 6% p.a. over 25 years, about $515 a month; over 10 years, about $888 a month; interest-only, $400 a month. The term you set decides the total interest, so match it to the purpose. The home loan repayment calculator runs any combination.
Does the equity calculator affect my credit score?
No. It runs in your browser on the numbers you type and nothing is lodged or checked. A credit enquiry happens only when you apply for a top-up, a split loan or a refinance with a lender.
What salary do you need for a $500,000 loan?
There is no single figure; lenders assess repayments at the loan rate plus a buffer against your income, living expenses and other debts. The borrowing power calculator estimates it from your own numbers. As a marker, $500,000 at 6% over 30 years costs about $3,000 a month, and lenders test it at a higher rate than that.