Glossary · Australian property
Equity.
The portion of a property you actually own. Current property value minus loan balance. Drives refinance capacity, second-property purchase deposits, and the headline 'how rich is your portfolio' figure.
Equity = current valuation − outstanding loan balance. If your $900K property has a $600K loan, you have $300K of equity (33% LVR; banks would call your equity proposition 67% LVR. Same coin, opposite framing).
Usable equity (lender lens) = 80% of valuation − loan balance, before any LMI. So a $900K property with a $600K loan has $720K (80%) − $600K = $120K usable. To pull more, you'd cross 80% LVR and trigger LMI on the new portion. Usually not worth it unless the next purchase justifies it.
Equity uses: deposit on next IP (top-up loan or split facility), home-improvement funding, debt consolidation. Best practice for IP buyers: use a separate split facility for each equity-funded purchase so each loan's interest is cleanly traceable for ATO deductibility (Domain ruling TR 2000/2 + ATO interpretive decision ID 2003/353).
Worked example
Owner-occupied home worth $1M, loan $400K. Total equity $600K. Usable equity = $1M × 80% − $400K = $400K. Use $200K of that as 20% deposit on a $1M IP, keeping $200K available for other moves and remaining at 60% combined LVR across both properties.
Source
APRA APG 223 (LVR cap rules); ATO TR 2000/2 (deductibility of borrowed funds).
Related terms
Open the playbook — 11 chapters end-to-end, every threshold cited.