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Home loans / Calculate equity in your home

What is equity?

  • Equity is the difference between the value of your property and the amount you still owe on your home loan. You can often access and use this equity to improve your lifestyle.

    If you’ve paid down some or all of your loan, and/or your home has increased in value, you may be able to use your equity for:

How equity works

  • To find out how much equity you have in your home, you may need to get a property valuation. You can also make an appointment with one of our Home Lending Specialists to discuss your equity options.

    Whether you can borrow additional funds to access the equity in your home will depend on a number of factors, such as your income, living expenses and how much you owe. Lenders’ Mortgage Insurance or a Low Deposit Premium may apply depending on the amount you want to borrow and the property valuation. The circumstances of your loan will also determine whether this may apply.

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How to build equity in your home

  • There are a number of ways you can build equity in your home:

    • Increase the value of your property by renovating your home
    • Reduce your loan balance by making more regular or larger repayments
    • Open an Everyday Offset. Any money you put into this account is deducted from your loan balance, meaning you’re only charged interest on the difference. For example, if you have $100,000 in your offset account, and your home loan balance is $300,000, you’ll only pay interest on $200,000 of your loan balance.

How to calculate equity

Equity calculation example:

  1. You have your home valued by your bank at $750,000.
  2. Calculate your home equity by subtracting your current loan balance from the total value. For example: If your loan is $400,000, then you have equity of $350,000, as equity is the difference between the market value of your home and the amount you owe.
  3. Next, calculate your useable equity. Banks are generally comfortable lending up to 80% of the value of your home, minus the amount you owe to the bank. In our example, 80% of $750,000 is $600,000, so the useable equity is $200,000.
  4. You may be able to leverage this equity in your home as a deposit on an investment property.

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Things you should know

  • Using the equity in your home means the total amount you owe on your home loan will increase, which can result in higher monthly repayments. There may also be restrictions on your home loan that can prevent you from making additional repayments or accessing the equity in your home.

    The target market for this product will be found within the product’s Target Market Determination, available here.