How to Use Your Home Equity: A Guide for Perth Homeowners

Equity isn't just a number on paper. Used well, it can help you renovate, invest, consolidate debt or buy your next property, without starting your savings from scratch.

This guide explains what home equity is, how much of it you can actually use, and the main ways Perth homeowners put it to work. You can also estimate your own position with our home equity calculator.

What is home equity?

Equity is the share of your property you actually own. It's your property's current value minus the amount you still owe on your home loan.

For example, if your home is worth $800,000 and you owe $500,000, your total equity is $300,000.

Equity generally grows in two ways: as you pay down your loan, and as your property value rises over time.

Usable equity is not the same as total equity

Here's the part that catches people out. You usually can't access all of your equity.

Lenders keep a buffer. As a general rule they'll lend up to 80% of your property's value without Lenders Mortgage Insurance (LMI). So your usable equity is around 80% of the value, minus what you owe, not the full amount.

Using the example above: 80% of $800,000 is $640,000. Less your $500,000 loan, that's about $140,000 of usable equity.

You can sometimes access more, up to around 90%, by paying LMI, which unlocks more equity but adds a cost. Our home equity calculator shows both, so you can see the difference.

How to work out your usable equity

A simple way to estimate it:

• Take 80% of your property's current value.
• Subtract your current loan balance.
• What's left is a rough guide to your usable equity.

That's only a starting point. What you can actually borrow also depends on your income, expenses, other debts and borrowing capacity, and the lender's own valuation. The quickest way to a realistic figure is to talk to us, or start with the equity calculator.

What can you use your home equity for?

Once you know your usable equity, the next question is what to do with it. These are the most common uses.

1. Renovate or improve your home

Rather than reaching for credit cards or a personal loan, eligible homeowners can often access equity through their home loan, at home-loan interest rates, to fund a renovation, an extension, landscaping or a pool. Whether it stacks up depends on the cost, your available equity and your longer-term plans.

2. Buy an investment property

Equity is one of the most common ways people get started in property investment. You may be able to put the equity in your home towards the deposit and costs for an investment property, rather than saving a separate cash deposit. You'll still need the borrowing capacity to service the extra lending, which we work out alongside your equity.

3. Buy your next home

If you're upgrading, equity in your current property can help fund the deposit and costs on your next one. The timing of selling and buying matters here, and there are different ways to structure it, which we can walk you through.

4. Consolidate debt

If you're juggling higher-interest debts like credit cards, personal loans or car loans, refinancing may let you roll eligible debts into your home loan to simplify repayments and ease cash flow. The trade-off is that stretching a short-term debt over a long loan term can cost more interest overall, so we look at how to consolidate debt sensibly and pay the consolidated portion down faster.

5. Other goals

Some people use equity for a large one-off expense, to invest elsewhere, or simply to give themselves a buffer. Whatever the goal, the same test applies: does borrowing against your home make sense for what you're trying to achieve?

How do you actually access your equity?

Accessing equity usually means adjusting your home loan, often through a refinance or a loan increase. Depending on your situation, that could mean topping up your existing loan, or refinancing to a new lender and releasing equity at the same time.

The lender will typically want to know the purpose of the funds, reassess your borrowing capacity and value your property. Usable equity tells you what might be available. Borrowing capacity tells you what you can actually service. Both need to line up.

Remember, equity isn't free money

This part matters. Accessing equity means borrowing more against your home and increasing your debt.

If you use it to invest, you're taking on investment risk. If you use it for a large purchase, the repayments need to stay comfortable. And going above 80% usually means paying LMI.

The question isn't just how much equity you have. It's what you'd use it for, and whether that's a sensible move for you. That's exactly the conversation we have with clients.

How much equity do you have? Find out

Start with our home equity calculator to estimate your total and usable equity. If you're not sure what your property is worth, you can request a free property report.

From there, Mesh Finance can help you work out what your equity could realistically be used for, check your borrowing capacity and compare your options, whether that's refinancing, accessing equity, or simply confirming your current loan is still a good fit. For a market-specific view, our Perth property values and home loan review article is a good next read.