The calculation
Equity is what the place is worth less what you owe on it. The number a lender will let you touch is smaller, and the difference catches people out. Both are below. Nothing leaves your browser.
A lender will use their own valuation, which can land either side of this.
Include every split and any redraw you have already taken.
Worked out in your browser. Nothing is sent to us and nothing is stored.
Enter both figures to see your total equity and the part of it a lender is likely to treat as usable.
The definition
Your equity is the share of the property you own outright: its current market value less the balance still owing on the loan secured against it. If the place is worth $900,000 and you owe $520,000, your equity is $380,000.
It grows two ways at once. Every principal repayment reduces the balance, and any rise in the property's value increases the other side. Most of the equity Australian homeowners hold was built by the second of those, not the first, which is why the figure is often much larger than people expect when they finally work it out.
The part you can use
Lenders will not let you borrow against every dollar of equity. The conventional limit is 80% of the property's value, because lenders mortgage insurance is usually payable once the amount borrowed exceeds 80% of the value of the property.1 So usable equity is 80% of the value, less what you still owe.
Total equity in that example is $380,000 and usable equity is $200,000. The $180,000 difference is not missing, it is simply the buffer the lender insists on keeping between your borrowing and the value of their security. You can borrow into it, but you will pay LMI to do so.
One caveat worth stating plainly: usable equity is a rule of thumb about pricing, not an approval. What you can actually borrow depends on income, expenses, existing debts and the lender's own valuation of the property. Plenty of people have usable equity on paper and no borrowing capacity at all.
1 Moneysmart (ASIC), lenders mortgage insurance (LMI), glossary, retrieved 28 July 2026.
What it is for
Equity is not income and accessing it is not a windfall. Every option below increases what you owe against the same property, raises your repayments, and pushes your loan to value ratio back up.
The catch
The calculation above is built from two numbers that change. Your balance falls a little each month. The property's value moves with the market around it, tracked monthly across Australia by Cotality's Home Value Index.2 Your equity is therefore different today than it was when you last thought about it, and the direction is usually up.
That matters because the useful moments are crossings, not levels. Crossing under 80% is when repricing becomes worth asking for. Reaching enough usable equity for a deposit is when a plan becomes possible. Neither event announces itself, and your lender has no incentive to mention the first one.
If you want the figure without having to remember to check, how property value estimates work explains where the value half of the equation comes from and how much to trust it.
2 Cotality, Home Value Index, July 2026 release, released 1 July 2026, reporting June 2026 data.
Questions
Equity is what the property is worth less what you owe. Usable equity is the part of it a lender will let you borrow against without charging lenders mortgage insurance, conventionally 80% of the value less your balance. The gap between the two is large. On an $900,000 property with $520,000 owing, equity is $380,000 and usable equity is $200,000.
Enough to keep the new loan at or below 80% of the property's value. Lenders mortgage insurance is generally payable when the amount borrowed exceeds 80% of the value of the property, so 20% equity is the conventional threshold. It applies to the total borrowing after whatever you are doing, not to your position before it.
Theirs, always. A lender orders its own valuation and lends against that figure, which can land either side of an online estimate. Automated estimates are useful for knowing roughly where you stand and for spotting when it is worth asking, but no lender will lend against one. Treat any number you calculate at home as an indication.
Yes, that is the usual reason people work it out. Lenders can increase your loan, add a split, or approve a line of credit secured against the same property. You are borrowing more money against the same asset, so the repayments go up and the loan to value ratio goes back up with them. It is not free money and it is not income.
No. An offset balance reduces the interest you are charged but it does not reduce your loan balance, so it does not change your equity or your LVR. It is your money sitting beside the loan rather than inside it. That is also what makes it useful, because you can take it back out without asking anyone.
Sources
Market figures are point in time published figures, checked each time this page is reviewed.
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Ratey
Working it out once tells you where you stand today. It moves as your balance falls and the market shifts, and the moments worth acting on are easy to miss. Ratey re-runs your free home loan health check every month against more than 35 Australian lenders, tracks your property value, equity and LVR, and tells you when something is worth doing.
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