Calculate your monthly repayment and total interest on a home equity loan, and check your combined loan-to-value ratio.
Rates as of Q2 2025 (example)
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This calculator estimates your monthly repayment and total interest on a home equity loan — a fixed-term loan secured against the equity in your property — and shows your available equity and combined loan-to-value (CLTV) ratio based on your current property value and existing mortgage balance. It helps you understand how much equity you can access and what a home equity loan would cost to repay.
This calculator uses the standard amortisation formula to compute a fixed monthly repayment for the equity loan amount, just like a standard principal-and-interest home loan. It also derives available equity and your combined loan-to-value ratio from your property value and existing mortgage balance.
Formula: Monthly Repayment = [Loan Amount × Monthly Rate] ÷ [1 − (1 + Monthly Rate)−Months], where Monthly Rate = Annual Rate ÷ 12. Available Equity = Property Value − Existing Mortgage Balance. CLTV = (Existing Mortgage Balance + Equity Loan Amount) ÷ Property Value × 100%. Total Interest = (Monthly Repayment × Total Months) − Loan Amount.
Example: A property valued at A$700,000 with an existing mortgage balance of A$400,000 has available equity of A$300,000. Taking a A$50,000 home equity loan at 8% (example rate — enter your actual rate) over 15 years gives a monthly repayment of about A$477.83, with total interest of roughly A$36,008.69 over the life of the loan. The combined loan-to-value ratio would be 64.29% (A$450,000 total debt ÷ A$700,000 property value). (Note: this example is for illustration purposes only — actual outcomes depend on your specific details.)
In Australia, accessing equity in your property is typically done in one of three ways: a home equity loan (a separate, fixed-term loan secured against your home, as modelled here), a line of credit (sometimes called an equity access loan or home equity line of credit, which provides a revolving credit limit you can draw on as needed — see our Line of Credit Calculator), or by refinancing your existing home loan to a larger amount and taking the difference as cash. Lenders generally require your combined loan-to-value ratio (CLTV) to remain at or below 80% after borrowing, though some lenders allow up to 90% (with lenders mortgage insurance applying above 80%). This means the amount of equity you can access is typically limited to 80% of your property value less your existing mortgage balance — not the full available equity. For example, on a A$700,000 property with a A$400,000 mortgage, a lender allowing 80% CLTV would lend up to A$560,000 in total, meaning the accessible portion is A$160,000 (A$560,000 minus A$400,000), not the full A$300,000 of equity. When using equity for an investment property purchase, the deductibility of interest on the equity loan depends on its purpose — interest on funds used to generate assessable income is generally deductible, while interest on funds used for personal purposes (such as a holiday or home renovation) is not. See the ATO's guidance or a tax adviser for specifics on your situation.
Most Australian lenders allow you to borrow up to 80% of your property's value in total (including your existing mortgage), without requiring lenders mortgage insurance. This means your accessible equity is typically 80% of the property value minus your outstanding mortgage balance — not the full gap between the property value and the mortgage. Some lenders allow up to 90% with LMI, but this adds cost.
The CLTV ratio is the total of all loans secured against your property (your existing mortgage plus the equity loan) divided by the property's current value. Lenders use it to assess risk — the higher the CLTV, the less equity cushion the lender has if property values fall. Most lenders in Australia cap the CLTV at 80% without LMI; exceeding 80% typically triggers LMI (which protects the lender, not you) and may result in a higher interest rate.
A home equity loan provides a fixed lump sum that you repay over a set term with fixed monthly repayments — suitable for a specific, defined expense. A line of credit (home equity line of credit) provides a revolving credit limit secured against your property that you can draw on and repay flexibly — more suitable for ongoing or uncertain costs. The tradeoff is that a line of credit offers flexibility but may encourage drawing more than needed; a home equity loan offers certainty of repayment.
It depends on the purpose of the borrowing. Under Australian tax law, interest on funds used to produce assessable income — such as purchasing shares or an investment property — is generally deductible. Interest on funds used for private purposes (such as a renovation on your primary residence, a car, or a holiday) is generally not deductible. If you are using equity for mixed purposes, only the portion used for income-producing purposes is deductible. Always confirm with a qualified tax adviser for your specific situation.
This calculator uses the value you enter, which is your own estimate. In practice, lenders will conduct their own valuation (typically a formal bank valuation, which may differ from market estimates or online valuations) and use that figure to determine your CLTV and borrowing limit. If your property has increased in value since you purchased it, the lender's valuation will be the binding figure for how much equity you can access.
Yes — accessing equity in your home to fund the deposit or purchase of an investment property is a common strategy in Australia and is sometimes referred to as using your home as "equity leverage." The interest on the portion of the equity loan used to produce rental income is generally tax-deductible. Be aware that using equity to invest amplifies both potential gains and potential losses, and your primary home remains security for the equity loan if things go wrong — always seek independent financial and tax advice before proceeding.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. The interest rate used is an example only and does not represent a rate currently offered by any specific lender — actual rates, maximum loan-to-value ratios, fees, and lending criteria vary by lender, change frequently, and depend on your individual financial circumstances. The property value used is an estimate only; lenders will conduct their own formal valuation. Consult a qualified financial adviser, mortgage broker, and tax adviser for advice specific to your situation.