Key takeaways:
Home equity and usable equity are different. Your total equity may be higher than what a lender lets you access.
Using home equity generally means borrowing more. Any additional borrowing is subject to lender criteria, serviceability assessment and approval.
Renovation costs extend beyond the building quote. Factor in professional fees, approvals, contingencies, repayments and interest when setting your budget.
How much equity you can access depends on your circumstances. Property value, existing debt, income, expenses and lender requirements can all affect the amount available.
Renovating versus moving requires a broader cost comparison. Consider borrowing, transaction costs, disruption and whether your current property can meet your longer-term needs.
Australia's property market has shifted. Cotality's national Home Value Index fell 0.9% in August 2026, marking the fifth consecutive monthly decline, although property-value movements varied between cities and market segments.
For homeowners, recent price movements are only one factor affecting home equity. Equity can build as you repay your home loan and your property's value changes, meaning homeowners who bought before earlier periods of property growth may still have substantial equity.
If you're planning a renovation, you may be able to access some of that equity to help fund the work. This generally involves additional borrowing, with the amount available depending on your property's value, existing loan balance, financial circumstances and lender criteria.
This guide explains how to calculate your home equity and usable equity, what different renovation budgets could cover, ways to access equity through your home loan, and what to consider when deciding whether to renovate or move.
How much equity do I have?
Your home equity is the difference between your property's current value and the amount you owe on loans secured against it. Equity can increase as you repay your home loan or if your property's value rises.
It can decrease if the property's value falls or you increase the borrowing secured against it. For example, if your property is worth $800,000 and you owe $500,000, your total equity would be $300,000.
Hypothetical example | Amount |
|---|---|
Estimated property value | $800,000 |
Amount owing | $500,000 |
Total equity | $300,000 |
This is a hypothetical example only. Your actual equity will depend on your property's current value and the amount you owe on loans secured against it.
Total equity is a useful starting point if you're considering using home equity to renovate. However, having $300,000 in equity doesn't mean you can necessarily access the full amount. Your usable equity will depend on factors including your property's value, existing borrowing, financial circumstances and lender criteria.
For more information, read our guide to understanding home equity, what it is and how to access it.
How much of my home equity can I use?
Your total equity and what you can access are different. Total equity is the difference between your property's value and the amount you owe on loans secured against it. Usable equity is the portion you may be able to borrow against, subject to lender criteria and approval.
When assessing how much equity you may be able to access, lenders typically consider:
Property valuation: The lender's valuation may differ from your estimate, which can change your calculated equity.
Loan-to-value ratio (LVR): Lenders may set maximum LVR requirements based on the loan, property and your circumstances.
Existing borrowing: The amount you already owe affects how much additional borrowing may be available.
Income, expenses and other debts: Lenders consider your income, living expenses, credit cards, loans and other financial commitments.
Serviceability: Having sufficient equity doesn't automatically mean you can borrow more. You must also meet the lender's requirements for servicing the additional debt.
Lender criteria: Lending policies vary, so the amount you can access can differ between lenders.
This means you could have substantial equity but less usable equity, or you may not qualify for additional borrowing. Before setting a renovation budget, consider both your equity position and how much additional borrowing you may be eligible for.
Jenniya Mergler, Executive Home Loan Specialist at Aussie, said usable equity is generally calculated based on your property's current value, with most lenders allowing equity to be released up to around 80% LVR.
"A $900,000 property with a $500,000 loan could have around $220,000 in usable equity at 80% LVR," she said.
The amount a lender will actually approve also depends on your income, existing debts, living expenses, credit history and overall borrowing capacity, and can vary depending on what the funds are being used for. Some lenders cap how much equity can be released, while others may require supporting documentation, such as renovation quotes, before approving the additional borrowing.
What can I use home equity for?
Homeowners may use home equity to fund renovations, from minor updates to major structural work. Because accessing equity generally means taking on additional debt, consider the renovation cost alongside the potential impact on your repayments and total interest costs.
Mergler said the most common uses Aussie Brokers typically see are releasing equity towards the purchase of another property, funding renovations, or accessing funds for larger personal expenses such as a holiday.
The budget ranges below are indicative only. Renovation costs vary by the property's location and condition, project scope, labour and materials, and any required professional fees or approvals.
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Indicative budget | Projects that could be considered |
|---|---|
Under $10,000 | Minor repairs and cosmetic updates |
$10,000 — $30,000 | Targeted room or outdoor upgrades |
$30,000 — $80,000 | Larger renovations or layout changes |
$80,000+ | Major renovations, extensions or additions |
Under $10,000: Smaller updates
A smaller budget may suit maintenance and cosmetic improvements rather than major changes. Depending on the property and local costs, projects could include:
Interior or exterior painting
Regrouting or resealing wet areas
Replacing tapware, lighting or cabinet hardware
Minor landscaping
Updating flooring in selected rooms
Prioritise essential repairs before cosmetic improvements to help make the most of a smaller budget.
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$10,000 to $30,000: Targeted renovations
This budget may provide scope to update a particular room or area, such as:
Updating a bathroom
Updating parts of a kitchen
Replacing flooring across a larger area
Improving a deck, pergola or outdoor area
Updating an entry or façade
How far your budget goes will depend on the project's scope, materials and labour costs, and any unexpected work. You may need to prioritise one project or complete renovations in stages.
Mergler said a scenario Aussie Brokers see often is homeowners who've recently completed a new build releasing some equity to finish off the landscaping and outdoor areas.
"Once the build is complete, there's often still things like fencing, gardens, paving or an outdoor entertaining area that they want to get done," she said.
Using some of the equity in the property can help them finish those areas without having to use all their savings upfront, she added.
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$30,000 to $80,000: Larger renovations
A larger budget may allow for more substantial work, including:
A larger kitchen renovation
A bathroom renovation
Internal layout changes
Exterior works
Converting a garage to another use
Structural or layout changes may also require advice, engineering work, planning or building approvals, or owners corporation or body corporate approval, depending on the property, project and location.
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$80,000+: Major renovations and additions
Higher renovation budgets may provide scope for major changes, such as:
A whole-home renovation
A ground-floor extension
A second-storey addition
Adding bedrooms or bathrooms
A granny flat or secondary dwelling, where permitted
For major projects, allow for more than the construction quote. Your overall budget may need to cover planning and building approvals, professional fees, unexpected costs and temporary accommodation.
If you're using home equity to renovate, factor the additional borrowing into your budget. Consider how the increased debt could affect your repayments and total interest costs before deciding how much to spend.
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Is it better to renovate or move?
Neither renovating nor moving is automatically better.
The right option depends on whether your current property can meet your needs, the total costs involved, local property conditions and your longer-term plans.
Renovating | Moving |
|---|---|
Stay in your current property and location | Buy a property that may better suit your needs |
Renovation and construction costs apply | Selling and purchasing costs apply |
Building work can cause disruption | Selling, buying and moving take time |
Additional borrowing may be required | A new or larger home loan may be required |
Changes may be limited by the property and approvals | Choices depend on available properties and your budget |
Can your current property meet your needs?
Renovating may be worth considering if you're happy with your location but need more space or a different layout. An extension, additional room or layout change could address those needs without moving.
Moving may be more practical if the changes you need would be difficult, costly or restricted by the property or local planning requirements.
You might also be interested in: Renovate, build or buy? Costs and what to consider
Compare the total costs
Look beyond the renovation quote or purchase price when comparing your options. Renovation costs can include construction, professional fees, approvals and a contingency for unexpected expenses. Moving can involve selling and purchasing costs, moving expenses and changes to your home loan.
Under either option, consider how much additional borrowing you may need and how it could affect your repayments and total interest costs.
Check your local property market
Property conditions vary by location and market segment, so national trends may not reflect what's happening in your area.
Cotality's September 2026 Home Value Index showed national home values fell 0.9% in August, the fifth straight month of decline. The downturn also broadened over winter, with 93% of capital-city suburbs recording a fall in value, up from 45.8% over autumn.
When deciding whether to renovate or move, compare recent sales of properties similar to yours with the price and availability of homes that could meet your needs if you moved.
You might also be interested in: Your guide to reading the property market like a pro
Consider your equity, borrowing and timeframe
Your usable equity may help fund a renovation or your next property purchase, but equity is only part of the equation. You'll also need to consider how much you can borrow, the resulting repayments and whether they fit your circumstances.
Think about how long the property is likely to meet your needs. Renovating may make sense if the planned changes could make your current home suitable for the years ahead. Moving may be worth considering if the property is unlikely to meet your longer-term needs.
Before deciding, compare the total costs, additional borrowing, practical disruption and longer-term suitability of both options.
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What should I consider before using equity for renovations?
Using home equity to renovate usually means taking on more debt secured against your property. Before borrowing, consider the full project cost and how the additional debt could affect your repayments and household budget. Use this checklist before setting your renovation budget:
Set a total project budget. Include construction, design, professional fees, approvals, materials and other project costs.
Allow for unexpected costs. A contingency can help cover additional work or expenses that arise during construction.
Calculate how much you need to borrow. Compare the total cost with any savings or other funds you plan to contribute.
Check the impact on repayments. Consider whether higher repayments would remain manageable alongside your living expenses and other financial commitments.
Consider the total interest cost. Borrowing over a longer loan term may reduce required repayments but can increase the total interest paid.
Factor in borrowing costs. Additional borrowing may involve fees and other costs, depending on the lender and loan.
Check approval requirements. Structural work and extensions may require planning, council or building approvals, depending on the project and location.
Check strata requirements. Renovations to strata-titled properties may require owners corporation or body corporate approval.
Consider using savings. Contributing savings could reduce the amount you need to borrow, but consider how much you want to keep available for emergencies and other expenses.
Consider the risk of overcapitalising. Renovation spending doesn't guarantee an equivalent increase in your property's value. Consider local market conditions and comparable properties when setting your budget.
Before using equity, treat the renovation as both a building project and a borrowing decision. Focus on the total cost and whether the additional repayments fit your circumstances, rather than simply how much equity you may be able to access.
Mergler said it's worth stress-testing that decision beyond today's rate.
"It's important to ensure the additional debt remains manageable if circumstances or interest rates change," she said.
How can I access equity in my home?
Accessing home equity involves applying for additional borrowing secured against your property. The options available will depend on your home loan, lender, finances and how you plan to use the funds.
1. Increase your existing home loan
You may be able to apply to increase your existing home loan. Your lender will typically assess your property's value, financial position and ability to service the additional debt.
2. Set up a separate loan split
Some lenders may allow you to set up the additional borrowing as a separate loan split. This can make it easier to track the balance and repayments associated with your renovation. Availability, features and conditions vary between lenders and loan products.
3. Refinance with additional borrowing
You may also be able to refinance your home loan and apply for additional funds as part of the new loan.
Refinancing can let you compare your current home loan with other options, but fees and other costs may apply. Compare the interest rate, fees, features, loan term and overall cost rather than focusing only on how much additional equity you can access.
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Compare the overall cost before choosing an option
How you access equity can affect your home loan's structure and overall cost.
Compare interest rates, upfront and ongoing fees, repayments, loan terms, loan features and lending and eligibility requirements. Whichever option you consider, additional borrowing is subject to lender criteria, assessment and approval.
An Aussie Broker can help you understand your equity position, assess your borrowing options and compare available home loans for your circumstances, subject to lender criteria and approval.