FunanceUsable equity at 80% LVR
The number that matters for borrowing, calculated the way lenders generally approach it, rather than the headline equity figure.
Property equity for Australian ownersEquity, and the part of it you can actually use.
Equity is your property's value minus what you owe. Usable equity is a smaller number, and it is the one lenders care about. Confusing the two is how people end up disappointed at the bank.
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$268,000
Against $488,000 of total equity. Your current LVR is 55.6%.
- Estimated property value
- $1,100,000
- 80% of value
- $880,000
- Debt, after offset
- −$612,000
- Total equity (value − debt)
- $488,000
- Usable equity at 80% LVR
- $268,000
$220,000 of your equity sits inside the 20% buffer. That is not money you have lost — it is money a lender will not let you borrow against without LMI.
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The rule of thumb most Australian lenders work to is 80% of the property's value, minus the debt still owing. The 20% buffer is what keeps you out of lenders mortgage insurance, and it means a meaningful chunk of your equity is not available to borrow against.
The other half of the problem is the valuation. Equity calculated on an optimistic guess at your property's worth is a fiction, and it is the input people are least disciplined about.
Funance keeps ABS capital city residential price index data alongside the calculation so your growth assumption has something published to sit against.
| Line | Amount |
|---|---|
| Estimated property value | $1,100,000 |
| 80% of value | $880,000 |
| Mortgage outstanding | −$612,000 |
| Total equity, value minus debt | $488,000 |
| Usable equity, at 80% LVR | $268,000 |
Illustrative property. Lender policies vary, and a bank valuation may differ from your estimate.
See it with your own numbers
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How it works
What the tool covers
ABS capital city price data
Quarterly residential price indexes for the eight capitals, straight from the Australian Bureau of Statistics, so growth assumptions can be checked rather than assumed.
Equity feeding net worth
Property equity is one of the two largest components of most household balance sheets. It flows straight into the net worth figure rather than living in a separate tool.
Investment property tracked separately
Investment property is modelled with its own growth projection rather than being lumped in with the family home.
What you need
- A considered estimate of your property value
- Your current mortgage balance
- Your capital city, for the ABS comparison
- Any offset balance
Questions
Before you start
What is usable equity?
Usable equity is generally 80% of your property's value minus the amount still owing on the mortgage. The 20% buffer is what keeps the loan out of lenders mortgage insurance territory, so it is not normally available to borrow against.
Will a bank agree with this number?
Not necessarily. Lenders order their own valuation and apply their own policy, and both can differ from your estimate. Treat the figure as a planning number rather than a pre-approval.
Where does the property data come from?
Quarterly residential property price indexes published by the Australian Bureau of Statistics, covering the eight capital cities.
Related
Related tools and guides
Net worth calculator Australia
Income tells you what came in. Net worth tells you whether any of it stayed. It is the single most useful number a household can track, and almost nobody tracks it.
Net worth calculator →Mortgage scenario calculator
A repayment calculator tells you what you owe today. A scenario engine tells you what happens if the RBA moves, if you put an extra $200 a month in, or if you refinance. Those are the questions that actually change decisions.
Mortgage rate rise calculator →Savings goal calculator
A savings goal is easy to set and hard to sanity-check, because the honest answer depends on every other commitment you already have. Funance builds the timeline from what is genuinely left over.
Savings goal calculator →Know where your money goes.
Know where you're going.
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