OneTaskBy Tim King · Updated
Home Equity Calculator
Usable Equity and How Much You Can Borrow Against Your Property Value
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How the Home Equity Calculator works
This home equity calculator works out how much of your house or property you own outright: the value minus what you still owe on the mortgage. Enter the property value, the mortgage balance and the lender's loan-to-value limit, and it shows your equity in money and as a percentage, plus how much of that equity a lender might let you borrow against. It works in any currency, so it suits UK property as well as US homes.
Home equity calculator formula
Equity is the value less the loan. Usable equity is the part you can borrow without going over the lender's limit:
Equity = value − loan balance Usable equity = value × LVR limit ÷ 100 − loan balance
Lenders commonly cap total lending at 80% of the value, and the value they use is their own valuation, which can be lower than you expect.
Worked example: plenty of equity
A home worth 800,000 with 400,000 owing has 400,000 of equity, half its value. At an 80% limit a lender would lend up to 640,000, so usable equity is 240,000. The current loan-to-value ratio is 50.0%.
Worked example: close to the limit
A home worth 650,000 with 500,000 owing has 150,000 of equity, or 23.1%. The loan-to-value ratio is 76.9%, so only 20,000 is usable before reaching 80%.
Home equity reference table
Equity and usable equity at 80% and 90% for a 400,000 loan balance.
| Property value | Equity | Usable at 80% | Usable at 90% |
|---|---|---|---|
| 500,000 | 100,000 | 0 | 50,000 |
| 550,000 | 150,000 | 40,000 | 95,000 |
| 600,000 | 200,000 | 80,000 | 140,000 |
| 650,000 | 250,000 | 120,000 | 185,000 |
| 700,000 | 300,000 | 160,000 | 230,000 |
| 750,000 | 350,000 | 200,000 | 275,000 |
| 800,000 | 400,000 | 240,000 | 320,000 |
| 850,000 | 450,000 | 280,000 | 365,000 |
| 900,000 | 500,000 | 320,000 | 410,000 |
| 950,000 | 550,000 | 360,000 | 455,000 |
| 1,000,000 | 600,000 | 400,000 | 500,000 |
| 1,050,000 | 650,000 | 440,000 | 545,000 |
| 1,100,000 | 700,000 | 480,000 | 590,000 |
| 1,150,000 | 750,000 | 520,000 | 635,000 |
| 1,200,000 | 800,000 | 560,000 | 680,000 |
| 1,250,000 | 850,000 | 600,000 | 725,000 |
| 1,300,000 | 900,000 | 640,000 | 770,000 |
| 1,350,000 | 950,000 | 680,000 | 815,000 |
| 1,400,000 | 1,000,000 | 720,000 | 860,000 |
| 1,450,000 | 1,050,000 | 760,000 | 905,000 |
Quick answers
- Equity share plus loan-to-value always make 100%.
- At an 80% limit, 20% of the value is never usable.
- A 10% rise in value on 800,000 adds 64,000 of usable equity at 80%.
- Usable equity is borrowing, not cash: it adds repayments.
- Equity rises when the value rises or the loan falls.
- Equity grows with how many repayments you have made as well as with the market.
Sources: Moneysmart home loans.
Checked against: 800,000 value, 400,000 owed, 80% LVR = 240,000 usable equity
FAQ
Does it work for a UK home or a home equity loan?
Yes. UK lenders call the limit loan to value (LTV) rather than LVR, but the sum is the same: value times the limit, minus the mortgage balance. The usable equity is roughly the most a further advance or home equity loan would lend.
What is usable equity?
It is the amount you could borrow against your home while keeping the total loan within the lender's limit, usually 80% of the value. It is often used as a deposit for an investment property or to fund renovations.
Does an offset balance count as equity?
Not in the lender's calculation, which uses the loan balance. Money in an offset account reduces the interest you pay, but the loan balance stays the same.
Can I borrow above 80%?
Some lenders go to 90% or more, often with mortgage insurance or a higher rate. Enter a different limit to see the effect. A higher limit raises the usable equity.
See also: all Property tools, Pay, Bills, Debt, Investing, Saving.
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