Last updated: August 19, 2026
The short answer
As a general rule, you need enough usable equity to cover 20 percent of the new property’s price plus around 5 percent for stamp duty, legal fees, and buffer. So on a $600,000 investment property you’d want about $150,000 of usable equity to make it work cleanly. Your usable equity is different from your total equity: it’s calculated as (property value x 0.80) minus your current loan balance. On a $900,000 home with a $500,000 loan, that’s $220,000 of usable equity, enough to comfortably support an investment property up to around $880,000. This post walks through the maths step by step so you can work out where you actually stand.
Want us to run the numbers on your situation? Book a free 15-minute call and we’ll do it with you.
A quick word before the maths
Over 15 years on the Coast, I’ve had this conversation with everyone from tradies who bought their first place at 22 through to teachers, retirees, small business owners, and shift workers at the hospital. The question is always the same: ‘Do I actually have enough to buy another one?’ And the answer is almost always ‘Let’s work it out together, because it’s not as complicated as you’d think.’
So here’s the plain-English version. If you can follow a supermarket receipt, you can work out your usable equity. It’s just two numbers and a bit of multiplication.
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First: what’s the difference between equity and usable equity?
These two get confused all the time, and the difference matters.
Total equity is the difference between what your home is worth today and what you still owe on it. If your home is worth $900,000 and your loan balance is $500,000, your total equity is $400,000. Simple.
Usable equity is the portion of that equity a lender will actually let you borrow against. Most lenders cap you at 80 percent of the property’s value in total lending. That 80 percent limit exists so you don’t have to pay Lenders Mortgage Insurance (LMI), which for equity releases isn’t usually worth paying.
So the total equity number matters for your net worth, but the usable equity number is what actually funds your next purchase. That’s the one that counts.
How to calculate your usable equity: the 3-step method
Grab a pen or a calculator. This takes about 30 seconds.
- Take your home’s current market value. Not what you paid for it. Not what the neighbour told you last year. What it would sell for today. For a rough number, check realestate.com.au’s estimated value or look at recent comparable sales in your street. A broker can order a formal valuation later.
- Multiply that value by 0.80. That’s your total lending capacity against the property.
- Subtract your current loan balance from the result. What’s left is your usable equity.
Step 1: Property value = $900,000
Step 2: $900,000 x 0.80 = $720,000 (this is your total lending capacity)
Step 3: $720,000 minus $500,000 = $220,000 usable equity
You have $220,000 of usable equity available to draw down for a deposit and costs on your next property.
Usable equity examples: different property values and loan balances
Here’s what the maths looks like across a range of common scenarios on the Sunshine Coast in 2026.
| Home value | 80% lending capacity | Current loan balance | Usable equity |
|---|---|---|---|
| $700,000 | $560,000 | $400,000 | $160,000 |
| $800,000 | $640,000 | $450,000 | $190,000 |
| $900,000 | $720,000 | $500,000 | $220,000 |
| $1,000,000 | $800,000 | $550,000 | $250,000 |
| $1,200,000 | $960,000 | $600,000 | $360,000 |
| $1,500,000 | $1,200,000 | $700,000 | $500,000 |
If your specific situation isn’t in the table, run the formula yourself. It works the same way at any value.
Second question: how much equity do you actually need?
Now that you know how to calculate what you have, the next question is what you need. And this depends on how expensive the next property is.
For an investment property in Queensland, you generally need to cover:
- 20 percent deposit on the new property (going below 20 percent triggers LMI, which is worth avoiding on investment loans)
- Around 5 to 6 percent for stamp duty and costs (investment property stamp duty is different from first home buyer exemptions, so full duty applies; add legal fees, application fees, and a small buffer)
So the rough rule of thumb: your usable equity needs to be around 25 to 26 percent of the new property price. Or the other way round: whatever your usable equity is, multiply by four and that’s roughly the maximum investment property price it supports.
Usable equity vs investment property price supported
| Usable equity available | Investment property supported (approx max) | Breakdown |
|---|---|---|
| $100,000 | Up to ~$400,000 | $80k deposit + $20k costs |
| $150,000 | Up to ~$600,000 | $120k deposit + $30k costs |
| $200,000 | Up to ~$800,000 | $160k deposit + $40k costs |
| $250,000 | Up to ~$1,000,000 | $200k deposit + $50k costs |
| $300,000 | Up to ~$1,200,000 | $240k deposit + $60k costs |
| $400,000 | Up to ~$1,600,000 | $320k deposit + $80k costs |
What about the rental income? Doesn’t that help?
Yes, absolutely. This is one of the pieces of good news about investment lending. When you apply for an investment loan, the bank will typically count a portion of the expected rental income as part of your income for serviceability purposes. Different lenders use different rules, but a common approach is to count 70 to 80 percent of the expected rent (they discount the rest to allow for vacancies, management fees, and rates).
So an investment property renting at $600 a week (that’s about $31,200 a year) might add $22,000 to $25,000 to the income figure used for serviceability. That materially changes what you can borrow. It’s one of the reasons investment lending is often more accessible than people expect.
If you don’t have enough equity yet
This is the second most common outcome of doing this calculation, and it’s not a dead end. If your usable equity number falls short of what you need, there are three practical levers you can pull.
Lever 1: Wait and let the equity grow naturally
If your Sunshine Coast property is likely to appreciate over the next 12 to 24 months and you’re actively paying down your loan, your usable equity number will grow on both sides of the equation. Sometimes the honest answer is ‘not quite yet, but you’ll be there in a year’. There’s no shame in that. It’s better than forcing a purchase you can’t quite support.
Lever 2: Accelerate your loan paydown
Every dollar you knock off your existing loan is a dollar of extra usable equity. Fortnightly repayments, offset account discipline, and voluntary extras all work here. If you’re actively targeting an investment property, treat your existing loan as the funding source and hit it hard. Read our full breakdown in how to pay off your mortgage faster: the 3 levers that actually work.
Lever 3: Get your property re-valued
If your Sunshine Coast property has appreciated substantially since you last had it valued, and your current loan balance is based on the older figure, a formal revaluation can unlock significant additional usable equity. This is usually done as part of a refinance or restructure, and it’s a very common first step in an equity-release-to-investment strategy.
Common misconceptions about equity
Misconception 1: ‘I can only use equity from an investment property, not from my home’
Not true. Most Sunshine Coast investors we work with are releasing equity from their owner-occupied home to fund the deposit on an investment property. The security is the same either way. What matters is the structure of the loan, which we cover in our pillar guide to using equity to buy an investment property.
Misconception 2: ‘Equity release means I’ve lost equity in my home’
Not really. You’ve converted equity from ‘sitting in the wall’ to ‘working for you’. Your home’s value hasn’t changed. Your loan against it has increased, so your net position is the same in dollar terms, but now you have an investment property working on your behalf as well.
Misconception 3: ‘I need to pay LMI to use equity’
Usually no. Sticking to the 80 percent LVR threshold avoids LMI entirely. Going above 80 percent (say to 90 percent) unlocks more equity but triggers LMI, and the cost usually outweighs the benefit for an equity release. Most brokers will steer you toward the 80 percent cap unless there’s a specific reason not to.
Misconception 4: ‘The bank will just let me draw down whatever I have’
Not quite. The equity is one side. Your income and serviceability is the other. If your usable equity supports an $800,000 purchase but your income only services $500,000 in additional lending, the $500,000 figure is the constraint. A broker maps both sides at the start so you don’t spend three months searching for a property you can’t actually finance.
A note on the Sunshine Coast market
Most of the clients I’ve worked with over the past few years who thought they were ‘nowhere near ready’ turned out to be closer than they realised. Property values across most of the Coast have moved meaningfully since 2020. If it’s been more than 18 months since you last checked your equity position, the number today is almost certainly higher than you think. It costs nothing to check, and it can genuinely change your options.
We work with equity-release borrowers across the Sunshine Coast, including in Maroochydore, Noosa, Mooloolaba, Buderim, Caloundra, Sippy Downs, Coolum, Kawana and surrounding suburbs. Our office is at 18/8 Fairfax Street, Sippy Downs.
Ready to work out where you actually stand?
Book a free 15-minute Home Loan Health Check. We’ll walk through your equity position with you, model what it could support, check your serviceability, and give you an honest read on whether an investment property is realistically in reach right now. No hard sell, no pressure.
Or call us on 07 5437 9073 during business hours. Our office is at 18/8 Fairfax Street, Sippy Downs, and we work with equity-release borrowers across the Sunshine Coast.
Frequently Asked Questions
Take your property’s current value, multiply by 0.80, then subtract your current loan balance. The result is your usable equity. Example: a $900,000 home with a $500,000 loan gives you $220,000 in usable equity (($900,000 x 0.80) – $500,000).
As a rough rule, your usable equity should be around 25 to 26 percent of the new property price. So $100,000 in usable equity supports an investment purchase up to about $400,000. $200,000 supports up to about $800,000. Multiply your usable equity by 4 for a quick estimate.
Total equity is the difference between your home’s value and your loan balance. Usable equity is what a lender will actually let you borrow against, capped at 80 percent of the property’s value. On a $900,000 home with a $500,000 loan, total equity is $400,000 but usable equity is $220,000.
Technically yes, but you’ll trigger Lenders Mortgage Insurance (LMI) which is typically $10,000 to $25,000 depending on the loan. For most equity releases, the LMI cost outweighs the benefit of accessing the extra equity. The 80 percent cap is where most sensible plans stop.
Lenders use formal valuations rather than online estimates. Depending on the loan size and lender, this could be a desktop valuation (based on comparable sales) or a physical valuation (a valuer visits the property). A broker orders and coordinates the valuation as part of the equity release process.
Usually yes, though not always with a different lender. Many equity releases involve creating a new split loan alongside your existing home loan. Some lenders allow this to happen with your current lender (called an internal restructure). Others require a full refinance. A broker maps the cleanest path for your situation.
Yes, absolutely. Most equity releases we do are for clients who still have an active mortgage on their home. What matters is that you have enough usable equity (property value gone up, loan balance gone down, or both), not that the original loan is paid off.
From application to funds available, typically 4 to 6 weeks. Faster if you’re staying with your existing lender for an internal restructure, longer if you’re doing a full refinance to a new lender. Property valuation is usually the longest step.
The application itself creates a credit enquiry, which has a small short-term impact. Doing an equity release once every few years has no meaningful long-term impact on your credit score.
Yes. Our free 15-minute Home Loan Health Check includes a rough equity calculation based on current market value, your loan balance, and the 80 percent lending threshold. If you’d like a formal number, we can order a proper valuation as part of the process.
Meet Chris Wilson, the heart of Sunshine Coast Financial Solutions (SCFS). With over a decade of experience in finance, Chris started his journey as a broker with Aussie Home Loans in 2009. His dedication earned him the title of Rookie of the Year in 2010. By 2011, he was ready to build a business based on trust and strong partnerships.
