FREE EQUITY TOOL
Home Equity Calculator
Find out how much equity you have in your home, and how much of it you could put toward an investment property. This home equity calculator uses the same loan-to-value rules New Zealand banks apply, so you get a realistic picture of your usable equity.
Takes under a minute | Have your home value & mortgage balance ready
COMMON QUESTIONS
The deposit you need depends on the type of property. Under the Reserve Bank's loan-to-value rules, existing investment properties usually require a larger deposit, around 35%, while new builds are treated more favourably and can often be purchased with a 20% deposit. New builds are exempt from the tighter investor rules to support housing supply. That difference matters: the same usable equity stretches further toward a new build than toward an existing rental.
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Once you know your usable equity, you can work backwards to an indicative purchase price. If you have $280,000 of usable equity and you are buying a new build at a 20% deposit, that equity could support a purchase of around $1.4 million. This is an illustration based on the figures you enter, not a lending offer, and it does not account for whether your income can service the loan.
Usable equity is the part of your total equity a bank will actually let you borrow against. It is not the same as total equity, and the difference catches a lot of people out. The Reserve Bank uses loan-to-value restrictions to keep the lending system stable, which is why New Zealand banks typically require owner-occupiers to keep at least 20% equity in their own home. That 20% is a protected buffer that stays locked in the property. Your usable equity is what sits above that buffer, plus any savings you can add.
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The calculation banks use is: 80% of your home's value, minus your remaining mortgage. On an $850,000 home with a $400,000 mortgage, that is $680,000 minus $400,000, which gives $280,000 of usable equity. Add your savings on top, and that is the amount you could realistically put toward a deposit.
Equity is the share of your home you actually own. You work it out by taking your home's current market value and subtracting what you still owe on your mortgage. If your home is worth $850,000 and you owe $400,000, your equity is $450,000. That figure is your total equity, and it is the starting point, not the amount you can borrow against.
Yes, and it is one of the most common ways New Zealanders fund a first investment property. Rather than saving a fresh cash deposit, you use the usable equity already built up in your existing home as security for the new loan. The equity acts as the deposit. This is how many people move from owning one property to owning two without needing large cash savings.
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Having the equity is only half the picture. The bank will also test whether your income can comfortably service the new loan at a stress-tested interest rate, which is usually higher than the current rate. Usable equity gets you to the deposit; serviceability decides whether the lending goes ahead.
Banks weight their deposit requirements by how the property is used. Owner-occupied homes and new builds sit at the lower end, around 20%. Existing investment properties sit higher, around 35%, because the Reserve Bank treats investor lending as higher risk to the wider system. New builds are exempt from the tighter investor rules to support housing supply. These settings are set by the RBNZ, change over time, and vary by lender, so the figures your own bank uses may differ from a general calculator.
There are two straightforward ways to increase your usable equity over time. The first is paying down your mortgage faster, which reduces what you owe and lifts the gap between your loan and the 80% threshold. The second is a rise in your home's market value, which lifts the 80% figure itself. You control the first; the market controls the second. Historically, both have contributed to the equity New Zealand homeowners have built, though past movements in property values are not a guide to what will happen next.
This home equity calculator shows your deposit position. It does not assess serviceability, your ability to meet the repayments on the new loan, which is a separate test every lender applies. It does not include the costs of buying and holding a property, such as legal fees, insurance, rates, and maintenance. And it uses general LVR settings rather than the exact policy of any one lender. Treat the result as a realistic starting figure, not a final answer.
Figures are indicative only and general in nature. They do not take your personal circumstances into account and do not constitute lending or financial advice. Lender criteria, serviceability, deposit requirements, and the Reserve Bank's LVR settings change over time and vary by lender. Historical references are to past conditions and are not a guide to future outcomes.