LVR and Equity: Worked Calculations
ADS Team
Author
August 18, 2026
24 days ago
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In short: LVR is your loan divided by the lender's valuation. Usable equity is different: it is 80% of the valuation less what you owe, because lenders will not release equity above 80% LVR without LMI. On a $900,000 property with a $500,000 loan, you have $400,000 of equity but only $220,000 of usable equity.
Key takeaways
- Usable equity = (valuation x 80%) - current loan balance.
- Total equity and usable equity are very different numbers.
- The lender's valuation governs, not your estimate or a listing price.
- Accessing equity is a new loan application with a full assessment.
The two calculations
LVR = loan ÷ valuation × 100. A $500,000 loan on a $900,000 property is 55.6%.
Usable equity = (valuation × 80%) − loan. That is ($900,000 × 0.8) − $500,000 = $220,000.
| Valuation | Loan | Total equity | Usable at 80% |
|---|---|---|---|
| $700,000 | $500,000 | $200,000 | $60,000 |
| $900,000 | $500,000 | $400,000 | $220,000 |
| $1,100,000 | $500,000 | $600,000 | $380,000 |
Why the cap exists
Above 80% LVR lenders require LMI, which you pay. Releasing equity to 90% is possible but the premium applies to the whole loan, not just the released portion - which is why most equity releases stop at 80%.
Accessing it
Equity release is a new credit application: full serviceability assessment, a valuation, and evidence of purpose. Having equity does not mean you can borrow against it - you still need the income to service the larger loan at the buffered rate.
Frequently asked questions
How do I get a valuation?
Ask your lender to order one. Many use automated or desktop valuations for existing customers at no cost. Your own estimate or a real estate appraisal is not what they lend against.
Can I access equity without refinancing?
Yes - most lenders offer a loan increase or a separate split against the same property, which avoids discharge and registration costs.
Does equity release affect deductibility?
The purpose of the borrowed funds determines it. Borrowing against your home to buy an investment keeps that interest deductible; borrowing for private use does not. Keep the splits separate.
Related reading
- LVR Explained: Why 80% Is the Magic Number
- Refinancing Your Home Loan: The Complete 2026 Process
- Investment Property Loans: What Is Different
Sources
- Prudential Practice Guide APG 223 — APRA
- Using equity in your home — ASIC Moneysmart
Information current as at 2 September 2026.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice. Consider whether it is appropriate for you and seek advice from a licensed credit representative before acting.
Any interest rate shown is an example only and is not an offer of credit. Where a rate is quoted, the applicable comparison rate is available from the relevant lender and should be considered alongside it.
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