Total equity vs. usable equity
As a rule, banks and lenders will only let you access 80% of the
value of your home, minus the debt that you still owe. This is known as
'usable equity' and will differ from the total equity you own.
This might be a little confusing, so let's see it in action.
Your property value = $500,000
80% of your property value = $400,000
Minus your mortgage = $300,000
Usable equity = $100,000
If you want to access more than 80% of your usable equity, your bank or lender might
let you – but if they do, you'll likely need to take out Lenders
Mortgage Insurance (LMI). LMI can cost you thousands of dollars
depending on the loan amount, so it’s worth considering if this is the
right path for you.