If you’re thinking about purchasing your next property, one of the most powerful tools you might already have is equity in your current home. Equity can help you upgrade, invest, or even buy your dream holiday home — but first, it’s important to understand what equity is and how to calculate it.

What Is Equity?

Equity is the difference between the current market value of your property and the amount you still owe on your home loan. In simple terms, it’s the portion of your home that you own outright.

How to Calculate Equity

Here’s a quick formula to calculate your home equity:

Equity = Current Property Value − Outstanding Loan Balance

Let’s break that down with an example:

• Your home is currently worth $850,000

• Your remaining loan balance is $450,000

• $850,000 − $450,000 = $400,000 equity

This means you have $400,000 in equity.

Understanding Usable Equity

While you may have $400,000 in equity, you won’t necessarily be able to use all of it. Lenders typically let you access up to 80% of your property’s value, minus what you still owe. This is to ensure you don’t overextend financially and helps you avoid Lenders Mortgage Insurance (LMI).

Using the same example:

• 80% of $850,000 = $680,000

• $680,000 − $450,000 (existing loan) = $230,000 usable equity

So, in this case, you could potentially access $230,000 to help fund your next purchase.

How Can Equity Help You Buy Another Property?

Usable equity can be used as a deposit for your next home or investment property. Rather than saving up a full deposit from scratch, you could leverage the value of your existing home to move forward sooner.

This strategy is commonly used by homeowners who want to:

• Upgrade to a larger or better-located home

• Start building an investment portfolio

• Purchase a holiday or weekend getaway property

  
  

Not Sure What Your Home Is Worth? Let Us Help.

Knowing your property’s current value is the first step in understanding how much equity you have available. At Baron Finance, we have access to CoreLogic Property Reports — the same trusted data used by banks and valuers.

We can provide you with a free, no-obligation estimate of your property’s value, helping you make an informed decision about your next move.

Let’s Unlock Your Equity Potential

Whether you’re upsizing, investing, or planning your next purchase, we’ll help you understand your borrowing power and explore the right loan strategy to match.