What Is Usable Equity & How to Access It | Good Finance Solutions
How to Access Usable Equity (And What You Can Actually Use It For)
If you own a home, chances are you’ve heard someone say “just use the equity” — but very few people explain what usable equity actually is, how much you can access, or what you can realistically use it for.
So let’s break it down in simple terms.
What Is Usable Equity?
Equity is the difference between what your property is worth and what you owe on it.
But usable equity is the portion of that equity a lender may allow you to borrow against — and it’s usually not the full amount.
Most lenders will allow borrowing up to 80% of your property’s value without charging Lenders Mortgage Insurance (LMI).
Example:
Property value: $800,000
80% lending limit: $640,000
Current loan balance: $400,000
👉 Usable equity: $240,000 (before costs and servicing checks)
What Can You Use Usable Equity For?
When structured correctly, usable equity can be very flexible. Common uses include:
Buying an investment property (using equity for the deposit and costs)
Renovations or extensions (kitchens, bathrooms, granny flats, landscaping)
Debt consolidation (credit cards or personal loans — done carefully)
Large purchases such as a car or caravan
Investment or business purposes, subject to lender policy
Every lender treats these purposes differently, so structure matters.
How Do You Access Usable Equity?
Accessing equity isn’t automatic — it requires a proper lending assessment.
1. Property Valuation
The lender orders a valuation to determine your property’s current value.
2. Lending Limits & Policy Review
Each lender has different rules around:
Maximum loan-to-value ratios (LVRs)
Acceptable use of funds
Loan structure options
3. Servicing Assessment
Even with plenty of equity, lenders must confirm your income comfortably supports the new total loan, factoring in:
Living expenses
Existing debts
Dependants
Interest rate buffers
4. Loan Structure
Equity is usually accessed by:
Increasing your existing loan, or
Creating a separate loan split (often the smarter option for flexibility and clarity)
Common Equity Myths
“My house has gone up in value, so I can use the equity.”
Only if your income supports the increased loan.
“Equity is basically free money.”
Equity is borrowed money — it still needs to be repaid.
“All banks treat equity the same way.”
Policies vary widely, which is why lender selection matters.
Thinking About Using Your Equity?
Usable equity can be a powerful tool — but it’s not automatic, and it’s not one-size-fits-all.
If you’d like to:
Find out whether you have usable equity
Understand how much you could access
Structure it in a way that supports your long-term goals
I’m happy to talk it through.
👉 Get in touch with me at Good Finance Solutions for a no-pressure chat and a clear picture of your options. Even if you’re just exploring ideas, clarity is a great first step.