You’ve used an equity calculator. What could your usable equity actually do?

You've used an equity calculator. What could your usable equity actually do?

Answering: After an equity calculator gives you a number, what is that number, why is it not an approval, and what could $600,000 of it mean in a purpose-built nine-bed?

Estimated reading time: 11 min read

The calculator’s number is an estimate of usable equity, usually 80% of a lender’s value minus what you still owe. It is not an approval, and it is not income. If that figure, or a mix of usable equity and cash, comes to $600,000 or more, one thing it can do is sit as the entry for a purpose-built nine-bed in Melbourne.

The printout is on the kitchen bench. The bank’s calculator and Harmony’s calculator have both spat out a figure that looks large enough to do something with. Three tabs are still open, and none of them explain the gap between that number and a loan a broker can actually place. The Harmony Group’s minimum is exact: $600,000 in cash, usable equity, or a combination of both. Clients pay Harmony $0. The team builds in Melbourne. Investors come from every state.

Key Insights

  • Usable equity is typically 80% of the property’s current value, minus the loan still attached to it. Westpac, NAB and CommBank all describe it that way.
  • The calculator does not test whether you can service the extra debt. APRA requires banks to assess repayments at the loan rate plus a 3 percentage point buffer.
  • $600,000 is Harmony’s minimum entry, not the full project cost. Average figures based on most recent projects. The nine-bed’s base project cost is $1,574,000.
  • 11.36%, based on recent acquisitions, is gross yield on that base cost. A standard $1.5 million investment property is modelled at 3 per cent gross.
  • Run the numbers on Harmony’s usable equity calculator, then take the result to a broker and a licensed financial adviser.

Table of Contents

What the calculator’s number actually is

Usable equity is the portion of your equity a lender may let you draw, after it applies its own loan-to-value limit.

Westpac puts the method in one sentence: when calculating how much equity you can use, most banks look for an LVR that is 80% of the current value of your home, which means usable equity is 80% of that value minus the current balance owing. NAB says the same thing with the other spelling: useable equity is 80% of the value of your home less the debt you still owe against it. CommBank’s worked example is identical in structure: 80% of a $750,000 valuation is $600,000, minus a $400,000 loan, leaves $200,000 of useable equity.

That is the formula behind most calculator outputs, including the one on Harmony’s usable equity calculator page. The rest of this article starts where the number stops.

Two things the formula does not do. It does not use the price a selling agent quoted at the weekend. The lender uses its own valuation. And it does not equal the gap between today’s value and what you still owe. That larger gap is equity. The smaller figure is usable equity. Mixing the two is how a $900,000 “equity” line becomes a $400,000 usable line after the 80% cap.

ASIC’s Moneysmart page on borrowing to invest adds the risk the calculator leaves off the screen. Some lenders let you borrow to invest and use your home as security. If you cannot keep up with repayments, you could lose your home. The number on the page is secured against the house you already live in.

Why the bank’s usable figure is not what you can borrow

Serviceability sits between the calculator and the loan.

APRA requires every bank it regulates to assess whether a new borrower could still meet repayments at an interest rate at least 3 percentage points above the loan’s actual rate. That mortgage serviceability buffer has stood at 3 percentage points since 2021. APRA restated it in its System Risk Outlook in May 2026. The buffer is applied to new and existing debts when you apply for the next loan. A discounted introductory rate does not lower the rate you are assessed at.

Since 1 February 2026, APRA has also limited authorised deposit-taking institutions to writing no more than 20 per cent of new mortgage lending at a debt-to-income ratio of six or more. The limit applies separately to owner-occupier and investor books. It excludes bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings. It is a cap on the bank’s book, not an automatic refusal of any one applicant. It still changes how freely a lender will stretch.

On 29 September 2026 the Reserve Bank’s Monetary Policy Board decided to increase the cash rate target by 25 basis points, from 4.35 per cent to 4.60 per cent. A cash rate decision does not change the buffer. The buffer is an APRA setting. It does not move because a calculator refreshed overnight.

How banks and valuers treat a nine-bed, including nine separate leases, is a different lending conversation. That is the subject of banks, valuers and nine-bed loans. The point for this page is simpler: the usable-equity number is an input. Serviceability is the test.

What $600,000 means as Harmony’s minimum

Co-living investment requires a minimum of $600,000 in cash, usable equity, or a combination of both. That is the entry Harmony asks you to bring. It is not the full price of the building.

Average figures based on most recent projects. The base project cost of the nine-bed is $1,574,000. Including additional considerations, the project cost is $1,650,250. The rest is typically financed. $600,000 can be all cash, all usable equity, or a mix. It cannot be a rounded-up “equity” line that still has an 80% cap sitting on top of it.

The team behind Harmony has 15+ years of specialist accommodation experience. The product is one knock-down-rebuild site in Melbourne’s middle ring, one purpose-built dwelling, nine rooms and nine bathrooms, plus shared living space. You own the whole building. Nine people live in it, each on their own lease. A specialist property manager runs it.

If the calculator printed $380,000, this particular building is not the next conversation. If it printed $600,000 or more, the next conversation is still not a purchase. It is whether drawing that much against the house you live in, into a single title in another state, is a loan you can service and an asset you actually want.

A granny flat on the block you already own is the other common use of the same $600,000. That comparison is a different page: granny flat or nine-bed. Do not flatten both options into the calculator output.

How to compare what that equity earns now with property

Usable equity is borrowing capacity, not cash, and cash sitting in a bank account is often earning little where it sits. Neither is a reason to draw it. It is a reason to put a second number next to it.

On Harmony’s nine-bed, 11.36%, based on recent acquisitions, is the gross yield on the base project cost. Average figures based on most recent projects. Each room’s weekly rent is shown as around $380. Behind the rounding sits an average of $382.50. $382.50 x 9 rooms x 52 weeks = $179,010 in gross annual rental income.

A standard investment property at the same $1.5 million price is modelled at $865 a week in total, $45,000 a year, a 3 per cent gross yield. That is the same $1.5 million buying one household’s rent instead of nine leases.

Those figures are gross. The net position depends on your loan structure, deposit and tax position. As a separate measure, 10.8% is the historical average gross yield across The Harmony Group’s delivered projects. The comparison is there so the calculator’s number has something to sit against other than the offset account.

If you want the $600,000 walked against the nine-bed in more detail, Harmony’s what $600,000 could earn page does that arithmetic.

How to check the operator behind the number

Before a usable-equity number goes anywhere near a building, check how the operator earns the right to it. A yield that arrives without these answers is a figure you cannot test.

  • How is the site chosen? Harmony uses the 118-point method across market analysis, area selection and property specification. Of the 20 to 30 markets the team analyses each quarter, typically only 4 to 6 pass.
  • How much is turned down? The team rejects around 85% of the opportunities it assesses.
  • Whose data sits behind the rent? Each property comes with an SQM Research market report with verified rental data.
  • Is the building certified before you commit? Class 1b certification is confirmed before commitment, on every property.
  • What happens once tenants move in? Harmony’s property management partners report occupancy above 98% across the buildings they manage.

Questions to take to your broker and adviser

Take the calculator printout, the latest statement on the loan secured by your home, and a one-page note that says you want income that arrives while you are still working, rather than after you stop.

Ask the broker:

  • What valuation will the lender use, and how far is it from the calculator’s value?
  • After the 80% cap, how much usable equity remains?
  • When you add APRA’s 3 percentage point buffer to this loan and to my existing debts, what can I actually service?
  • Does a loan for a purpose-built nine-bed sit inside or outside the DTI cap for new dwellings?
  • Who pays you if I proceed, and who pays you if I stop?

Ask a licensed financial adviser, if you want personal advice:

  • Are you on the Financial Advisers Register?
  • Does drawing $600,000 against my home into a single Melbourne title suit my other assets and my income?
  • If the rent undershoots the gross figure, what else in the plan has to change?

Clients pay Harmony $0. Builders pay the fee at settlement. The team can explain the building.

The next step after the number

If the calculator printed less than $600,000 and you have no cash to make up the difference, stop here. If it printed $600,000 or more, learn how the building works before you treat the number as a brief.

The free co-living education program covers what you would own, how a nine-bed is designed and run, and how the income line is built.

Do not skip the broker. Do not skip the adviser. Do not let a calculator close either conversation.

Frequently Asked Questions Once the Calculator Has Finished

Q: Is the number on the calculator the amount I can borrow?

No. It is an estimate of usable equity, usually 80% of a lender’s value minus the current loan. The lender still has to value the property, test serviceability at the loan rate plus APRA’s 3 percentage point buffer, and decide whether the extra debt fits its book. ASIC’s borrowing-to-invest guidance is that your home is the security. Treat the number as an input, not an approval.

Q: Is $600,000 enough to buy the nine-bed outright?

No. Co-living investment requires a minimum of $600,000 in cash, usable equity, or a combination of both. Average figures based on most recent projects. The base project cost is $1,574,000, and the project cost including additional considerations is $1,650,250. The balance is typically a loan. Your broker tests whether that loan is serviceable for you.

Q: Does 11.36%, based on recent acquisitions, mean I take that home after costs?

No. In short, 11.36%, based on recent acquisitions, is a gross figure on the base project cost. Average figures based on most recent projects. At an average of $382.50 a week per room, shown as around $380, nine rooms over 52 weeks give $179,010 in gross annual rental income. Interest, rates, insurance, management and vacancies sit under that line.

Q: Can I use the equity if I do not live in Melbourne?

Yes. We build in Melbourne. Our investors come from every state. The process can run remotely. The loan is still assessed where the lender assesses it, against the house that secures it and against your income, wherever you live.

Q: Should I run Harmony’s calculator or the bank’s?

Run both if you want. Harmony’s usable equity calculator uses the same 80% structure most banks describe. The number that matters is the one a lender will stand behind after a valuation and a serviceability test. Use the calculator to see whether you are near $600,000. Use the broker to see whether the loan exists.

Learn what the $600,000 is for before you draw it

The free co-living education program walks through how a purpose-built nine-bed works, what you would own, and how the income line is built from nine leases. The core part takes around 45 minutes. Finish any 9 modules and a booking link opens for a one on one with one of the directors. If co-living isn’t suitable for you, we’ll tell you why.

Citations

General information only. The Harmony Group provides general information about property and co-living investment, not personal financial, tax or legal advice, and does not hold an Australian Financial Services Licence (AFSL). It does not account for your objectives, financial situation or needs, so consider its appropriateness and seek advice from a licensed financial adviser, mortgage broker, accountant or the ATO before acting. Past performance is not a guide to future results and historical figures may not be repeated. The 2027 negative gearing reform was enacted on 26 June 2026 and applies from 1 July 2027. The definition of a new residential dwelling is still being settled after Treasury’s consultation, so whether a nine-bed is an eligible new build remains unsettled. Other tax or regulatory measures described are subject to change.


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