Home Equity: What It Is, What You Can Access, and What It’s Not

August 20, 2026 4 Min Read

Search “home equity” and you’ll get a mix of bank calculators and broker guides, most aimed at working-age borrowers. But a chunk of people typing this in are pensioners looking for something else entirely, and almost nothing online tells the two apart clearly.

Quick Answer: Home Equity

Home equity is the difference between what your property is worth and what you still owe on it. Most lenders cap what you can borrow at 80% of your property’s value. Then they subtract your existing loan balance. This is called usable equity. On an $800,000 home with a $400,000 loan, that’s ($800,000 x 80%) – $400,000. The result is $240,000 in usable equity. This is separate from the government’s Home Equity Access Scheme (HEAS). HEAS is a pension-age product with its own rules, which this guide also covers.

The Worked Example: Calculating What You Can Access

Equity itself is simple: property value minus loan balance. On the $800,000 home above with $400,000 owing, your total equity is $400,000.
Usable equity is smaller than total equity. Lenders generally cap borrowing at 80% of the property’s value. So you subtract your loan balance from that 80% figure, not from the full value.
The formula in full: (property value x 80%) – loan balance. Plug in real numbers. You get a concrete figure to work with, not just an abstract percentage.
Some lenders will go above 80% with lenders mortgage insurance. So your genuinely usable amount can shift. It depends on which lender and LVR cap applies to you.

Standard Home Equity Loan vs the Home Equity Access Scheme

A standard home equity loan is a bank product for working-age borrowers. You borrow against your usable equity through your existing lender or a new one. It’s added to or structured alongside your mortgage.
The Home Equity Access Scheme (HEAS) is a completely different, government-run product. It’s aimed at older Australians of Age Pension age. Services Australia runs it, paying out as a fortnightly amount or a lump sum.
HEAS works more like a reverse mortgage than a standard loan. Interest builds up over time. It’s usually repaid from your estate later, not through regular repayments like a standard loan.
Searching “home equity” without specifying which one can lead you to the wrong product. So if you’re at or approaching pension age, check the Services Australia HEAS page directly, not just standard bank pages.

Common Uses for the Money You Access

Home renovations are the most common use. You’re improving the same asset the money came from. This is generally viewed as one of the lower-risk uses.
Debt consolidation can lower your overall interest cost. Rolling credit card debt into a home loan rate often cuts total interest paid. But it does stretch out how long that debt sits against your home.
Buying an investment property is a common strategy. You use this money as a deposit. That means borrowing against one asset to buy another that should grow in value.
Be cautious using this money for depreciating purchases. A car or holiday paid off over 20-plus years costs more in the long run. You pay mortgage rates the whole time, on something losing value.

Does Accessing Equity Increase Your Repayments?

Yes, accessing equity increases your total loan balance. Whether it’s structured as a separate loan or added to your existing mortgage, you now owe more than before.
Your regular repayments go up to match. So before releasing any money, run the new repayment figure against your budget. Don’t just look at the amount you’re planning to access.
The term length affects how much repayments actually rise. Spreading the new amount over your remaining loan term reduces the repayment increase. But it also means paying more interest over time.
Lenders will reassess your ability to service the higher amount. So expect a new serviceability check, similar to applying for a fresh loan, even though you’re borrowing against an asset you already own.

FAQ: Home Equity

What is home equity?
The difference between your property’s current value and what you still owe on your loan. It’s not the same as usable equity, which is typically capped at 80% of the property’s value minus your loan balance.

How much home equity can I access?
Usually up to 80% of your property’s value minus your existing loan balance. Some lenders allow more with lenders mortgage insurance, so the exact figure depends on your lender’s policy.

What’s the difference between home equity and the Home Equity Access Scheme?
A standard home equity loan is a bank product for working-age borrowers. The Home Equity Access Scheme is a separate government scheme for Age Pension-age Australians, working more like a reverse mortgage than a standard loan.

Does using home equity increase my mortgage repayments?
Yes. Accessing equity increases your total loan balance, and your regular repayments rise to match, regardless of whether the amount is added to your existing loan or structured separately.

Can I use home equity to buy a car?
You can, but it means paying off a depreciating asset over your home loan’s full term, often 20-plus years, at mortgage rates. Many borrowers find a shorter-term car loan cheaper overall despite the higher rate.