How much of my equity can I actually use?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 8 min read

The short answer

Up to 80% of what the bank values your place at, less what you owe. That's the magic number. Then your income has to carry the bigger loan, because equity isn't cash in the wall, it's something you borrow.

So there are two numbers, not one. The valuation sets how much equity is there. Your income decides how much of it you can actually use. Everything below sits between those two.

Usable equity: 80% of value, less what you owe

Here's how much equity you can borrow, in its simplest form. Say your place values at $700,000 and you owe $450,000. Eighty percent of $700,000 is $560,000, so taking the loan up to that line releases $110,000, and you stay clear of lenders mortgage insurance. Illustrative numbers, not a quote. The full version of this is How much of my equity can I actually use to fund the next property?

The number that whole sum hangs off is the bank's valuation, and lenders don't agree with each other on it. I've seen the same home come back around 9% apart at two lenders, which on a $700,000 place is roughly $50,000 of equity appearing or disappearing before a single policy gets applied. So if the goal is to pull out as much as you can, getting a couple of opinions on what your place is worth is the cheapest lever there is.

Above 80% is possible at a lot of lenders, but you pay mortgage insurance, the amount released shrinks and a couple of lenders won't go there at all. What does cash out mean, and what will the banks accept as a reason for my cash out? has the ATM version.

Want your usable equity worked out? Book a call

I'll order desktop valuations across a few lenders, work out what sits under 80%, and run whether your income carries the bigger loan. Before anything is lodged.

Book a 30 minute call Call 0437 189 939

Equity is not income: servicing still decides

This comes up a bit. Someone says we've got so much equity, can't we just pull it out? You can, as long as you can borrow it. The bank can't hand you equity. It can only lend it to you, secured against the house, and before a dollar moves it wants to see your income cover the new, bigger repayment over thirty years at a buffered rate, with every other debt you've got counted on top. You could have all the equity in the world. If the income isn't there, the answer is no. That's Why doesn’t my equity count as borrowing power?

It's also why going back to your own bank isn't the shortcut people assume. An increase is a brand new lending decision. The paperwork isn't far off a refinance, and sometimes you wait weeks only to hear no, when the increase could have been built into a refinance in the same time. That's Is it easier to borrow more from my current bank than it is to switch?

What the bank will accept as a purpose on a cash out refinance

For personal and investment purposes, most lenders are pretty relaxed. A car, a holiday, a renovation, a deposit on the next place, paying out other debts. Under a certain amount they'll take your word for it and record the purpose, and that no questions amount is where lenders differ most: from about $100,000 at the tight end to $1 million, or no set cap at all, at the generous end. Above it you show them the thing, which means quotes, a contract of sale, an accountant's letter or a statutory declaration. Business use and tax debts shorten the list of lenders, which is a lender choice question, not a dead end.

Two purposes come up a lot. The first is consolidation, and the answer to Can I roll my car loan and credit card into the home loan? is yes, providing the total stays under 80% of value. The trap is paying a five year car off over thirty years, so keep paying what the car and card used to cost you, aimed at the home loan. The second is energy. If your household earns too much for the government's subsidised solar loans, equity can fund the system instead, and the sum is simple: if what you save on the power bill outruns the repayment on the extra borrowing, it pays for itself. Your own bills and quote are the only figures that matter, which is what We earn too much for the interest-free solar loans. Can we use home equity for solar and a battery? walks through.

Renovations: before, during, after

Can you borrow more on your mortgage for renovations? Generally yes, for non-structural work: kitchen, bathroom, flooring, paint, the outside area. That's a straightforward cash out, as an increase or a separate reno split, as long as the valuation supports it. Structural work, extensions and knockdowns go down a construction route instead, with a fixed price building contract and the bank releasing money in stages. All of that is in Can I pull equity out for a reno, and will the bank lend me the money for the work?

Before you buy: if you already own with equity, we can borrow above the purchase price of the next place and earmark the extra for the work. On the 5% scheme the loan is capped at the property, so no. With cash plus a guarantor, the guarantor can cover the purchase and your cash becomes the reno budget. Can I borrow extra at purchase to fund the renovations?

During: if family is chipping in for a new kitchen and you're not applying for a cash out, the bank generally doesn't know or care how you pay the tradies. Structural is different, because the bank signs off on the build and may want a gift letter showing the money is there. See My family's paying for part of the renovation. Does the bank need a gift letter?

After: if a refinance is on the cards, wait until the work is finished if you can help it. A valuer walking through a gutted bathroom marks the place down. Finish, get a couple of valuations, then go shopping. That's Should I wait until my renovation is finished before I refinance, or do it now?

Using equity to buy an investment property or your next home, kept separate

Equity is the deposit you didn't have to save. If your place has room under 80%, the release can cover the deposit and costs on the next purchase without a dollar of new savings, which is why the answer to Do I need to save a full 20% deposit again for my next home? is usually no. Short of 20% in cash or equity, the new loan sits above 80% and you're weighing mortgage insurance against waiting.

How it's set up matters as much as how much comes out. My preference is the deposit released against the home as its own split, and the purchase loan secured only against the new property, so selling or refinancing one later doesn't drag the other into the valuation. A purchase contract is accepted evidence everywhere. Releasing cash to sit in an account while you look is what trips the caps, especially above 80%, where a few lenders limit investment purpose releases.

Debt recycling and the tax line (accountant first)

I'm not an accountant or a financial planner, so this is the lending side only. Debt recycling is what it says in the name. Instead of putting offset cash down as the deposit on an investment, you pay it off your home loan, then redraw it as a separate split for the deposit. The idea is that the purpose of that slice of debt changes, from your home to an investment. The ATO's general position is that whether interest is deductible depends on what the borrowed money is used for, not which property secures it. Whether that works for you, and how the splits have to be set up to keep it clean, is your accountant's call before anything moves. The mechanics are in What is debt recycling, and how does it help me buy an investment property?

Borrowing against an inherited house

If your parents have passed and left you the house, first of all, I'm sorry. Once it's legally transferred into your name, it's yours to do with as you wish. Keep it, sell it or borrow against it, and a lender treats it like any other property you own. The part to be patient with is the transfer itself, because until the estate is wrapped up and the title is in your name, a lender can't take it as security. That one has its own page: My parents died and left me the house. Can I keep it or borrow against it?

The honest part

Pulling equity out is a bigger home loan. Take $30,000 for a car, make minimum repayments over thirty years, and the car can cost far more in interest than it did on the lot. Give it its own split and a plan.

The version that goes wrong is releasing to the maximum, spending to the top of the borrowing number and leaving no buffer anywhere. Equity is a deposit or a reno budget you didn't have to save. That's all it is.

Want your usable equity worked out? Book a call

Send me your current loan statement and a rough idea of what you want the money for. I'll tell you what your place is likely to value at, how much sits under 80%, and whether your income carries it.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers.

Common questions about using your home equity

How much equity can I borrow against my house?+

Generally up to 80% of what the bank values your property at, less what you still owe, without lenders mortgage insurance. On a $700,000 home with $450,000 owing, that's about $110,000. Some lenders go higher with mortgage insurance, but the amount they'll release shrinks and the paperwork goes up. Your income still has to cover the bigger loan, so the valuation sets how much equity is there and your income sets how much you can use.

Can I borrow more on my mortgage for renovations?+

Usually yes for non-structural work like a kitchen, bathroom, flooring or paint, as a cash out under 80% of value, either as a loan increase or a separate split. Structural work, extensions and knockdowns go down a construction route with a building contract and staged payments instead. Either way the valuation and your income decide how much comes out.

What will the bank accept as a reason for a cash out?+

Most personal and investment purposes: a renovation, a car, paying out debts, a deposit on another property. Under each lender's threshold you just state the purpose. Above it you show evidence like quotes, a contract of sale or a statutory declaration. Business use and tax debts narrow the list of lenders, so they're about picking the right one rather than a flat no.

Can I use the equity in my home to buy an investment property?+

Yes, as the deposit and costs, as long as your income carries both loans. It's usually cleanest to release the deposit against your home as its own split and secure the purchase loan only against the new property, so the two properties stay separate. How the investment affects your tax is a question for your accountant before you set the loans up.

Should I refinance before my renovation is finished?+

If you can help it, wait. A valuer who walks into a half finished bathroom will mark the property down, and that number won't reflect what your home is worth once the work is done. Finish the renovation, get a couple of valuations, then compare lenders.

Next question

Investment property loans: how the bank sees your first one, or your fourth

If the equity is going towards an investment, this is how lenders shade the rent, stack the buffers and read the security on the purchase itself.