Equity Release Calculator

What is equity release?

Equity release means borrowing against the equity in your home — the difference between your property value and outstanding mortgage. It's commonly used to fund renovations, investment properties, or debt consolidation.

How LVR (loan-to-value ratio) works

LVR is the percentage of your property value you owe on the mortgage. For example, a $500,000 home with a $400,000 mortgage has an LVR of 80%.

• Lower LVR = more equity released, easier to get approved
• Higher LVR = less equity available, may need LMI (Lenders Mortgage Insurance)
• Typical limits: 80% for owner-occupied homes, 70–75% for investment properties

What affects equity release approval?

Lenders consider multiple factors beyond just LVR:

• Income and serviceability
• Employment history and stability
• Credit history and existing debts
• Property type (residential, investment, commercial)
• Loan structure (fixed vs. variable rate)

LMI — When It Applies and What It Costs

If releasing equity pushes your LVR above 80%, most lenders require Lenders Mortgage Insurance (LMI). LMI protects the lender (not you) if you default. Costs vary by LVR and loan amount:

• 80–85% LVR: Roughly 0.5–1.0% of the loan amount
• 85–90% LVR: Roughly 1.5–2.5% of the loan amount
• Above 90%: Rarely available for equity release; 2.5–4%+ if approved

On a $700,000 loan at 85% LVR, LMI could be $7,000–$17,500 added to your loan balance. Some lenders allow LMI to be capitalised (added to the loan) rather than paid upfront.

Common Uses for Equity Release in Australia

• Home renovation: Using equity to fund renovations that add value to the property
• Investment property deposit: The most common use — releasing equity in your home to fund the deposit on an IP
• Debt consolidation: Rolling higher-interest debts (car loans, credit cards) into a lower-rate mortgage — note this extends the repayment period
• School fees or large expenses: Drawing on equity for major life events
• Business purposes: Self-employed borrowers sometimes use equity as working capital (note: business-purpose loans may have different tax treatment)

Tax Considerations

Interest on equity released is only tax-deductible if the funds are used for income-producing purposes (e.g. a rental property deposit). Interest on equity used for personal purposes (renovation, school fees, holidays) is not deductible. Keep your loans split by purpose — mixing personal and investment borrowing in one account complicates your tax position. Speak to your accountant before releasing equity for mixed purposes.

Next steps

Use this calculator to understand your borrowing capacity, then contact a mortgage broker or your bank for a formal pre-approval with specific terms and rates.