How much usable equity do I have, and what could $600,000 of it earn in a high-yield property?

How much usable equity do I have, and what could $600,000 of it earn in a high-yield property?

Answering: How much usable equity do I have, and what could $600,000 of it earn in a high-yield property?

Estimated reading time: 14 min read

Usable equity is roughly 80 per cent of your property’s current value minus what you still owe on it, and it is usually larger than homeowners expect, because it grows quietly every time the property’s value rises or the loan balance falls, with no one sitting down to add it up. Once you know that number, the next question is what it can actually earn if you put it to work instead of leaving it sitting against a mortgage you have already paid down. The Harmony Group’s team carries experience spanning more than 200 high-yield and specialist accommodation projects. The Harmony Group treats $600,000 as the floor for its nine-bed, high-end co-living investment, in cash, usable equity or a combination of both.

If you have spent years paying down a mortgage while watching your bank balance barely move, it is a reasonable thing to feel a bit stuck. The equity is real, but turning it into an actual return means understanding how much of it a lender will actually let you use, and then finding somewhere for it to go that is not another negatively geared property costing you money every month.

The reality is that most homeowners never work out their usable equity properly. They either underestimate it because they are still thinking in terms of the original purchase price, or they overestimate it because they forget lenders will not let you borrow past 80 per cent of the property’s value without paying for Lenders Mortgage Insurance on the difference.

Key Insights

  • Usable equity is typically 80 per cent of your property’s value minus your existing loan balance. On a $1,200,000 property with $350,000 still owing, that works out to around $610,000.
  • $600,000 in cash, usable equity or a mix of both is the minimum The Harmony Group asks investors to bring to a nine-bed co-living project.
  • Average figures based on most recent projects: a nine-bed project has a base cost of $1,574,000, gross annual rental income of $179,010, and a gross yield of 11.36 per cent on that base cost, against $45,000 a year and 3 per cent for a standard $1.5 million investment property.
  • A lender’s own serviceability test, including APRA’s interest rate buffer, decides how much of your calculated equity you can actually use, so the number on paper and the number a bank approves are not always the same.

Table of Contents

What Counts as Usable Equity in Your Home

Usable equity is the portion of the value already built up in your home that a lender will actually let you access, and it is not the same as your total equity. Total equity is simply your property’s current value minus what you owe. Usable equity is smaller, because lenders generally will not let you borrow past 80 per cent of a property’s value without charging Lenders Mortgage Insurance on the excess, a threshold confirmed on Westpac’s own loan-to-value ratio guidance. That 80 per cent line exists because it is the point at which the bank’s own risk on the loan starts to rise, not because of anything about you personally.

Usable equity is the amount you could realistically borrow against your home, calculated as roughly 80 per cent of its current value minus your existing loan balance and any other debt secured against it.

Loan-to-value ratio (LVR) is your loan amount divided by the property’s value, expressed as a percentage. Most lenders treat 80 per cent as the ceiling before Lenders Mortgage Insurance applies.

For a $1,200,000 property with $350,000 still owing, the maths looks like this: 80 per cent of $1,200,000 is $960,000, and $960,000 minus the $350,000 owing leaves $610,000 in usable equity. That is above the $600,000 The Harmony Group treats as the floor for a nine-bed co-living project, in cash, usable equity or a mix of both.

  • If your loan balance is close to your original purchase price, your usable equity will be smaller than you expect.
  • If your property has grown in value and you have been paying the loan down, the gap between total equity and usable equity closes fast.
  • A lender’s own valuation, not a real estate agent’s estimate, is what your usable equity is ultimately based on.

How to Calculate Your Usable Equity in Four Steps

Working out your usable equity is arithmetic, not guesswork, and it only takes four steps.

  1. Get a current valuation. Use a recent bank valuation or a professional appraisal, not the price you paid or a rough estimate from a real estate portal. Property values move, and the number you use has to reflect today, not the year you bought.
  2. Apply the 80 per cent threshold. Multiply the current valuation by 0.8. Most Australian lenders will lend up to 80 per cent of a property’s value without charging Lenders Mortgage Insurance on the difference, so this is the ceiling most brokers work from first.
  3. Subtract what you still owe. Take away your current loan balance, and any other borrowing secured against the same property, from the 80 per cent figure. What is left is your usable equity.
  4. Confirm it with your lender before you plan around it. The number you calculate is a starting point, not an approval. Your lender will still apply its own serviceability test, including the interest rate buffer APRA requires banks to build into their assessments, so the amount they will actually let you use can be lower than the figure on paper.

Run through the example again with your own numbers. A property valued at $1,400,000 with $500,000 owing gives you 80 per cent of $1,400,000, which is $1,120,000, minus $500,000, leaving $620,000 in usable equity, comfortably above the $600,000 floor for a nine-bed co-living project. A property valued at $900,000 with $550,000 owing gives you $720,000 minus $550,000, or $170,000, which on its own is short of that floor and would need to be combined with cash or a co-investor to reach it. Once you have confirmed your own number, the next decision is separate from the equity calculation: how you structure the purchase, in your own name, through a trust or otherwise, which affects both serviceability and tax and is worth settling before you get too far into the search.

  • Use a real, current valuation, not the purchase price.
  • Work from 80 per cent of that valuation, then subtract everything owing.
  • Treat your own figure as a starting point until your lender confirms it.

What $600,000 Could Earn in a Nine-Bed Property

Average figures based on most recent projects put a nine-bed, high-end co-living property at a base project cost of $1,574,000, or $1,650,250 once additional considerations are included. Each of the nine rooms rents for an average of $382.50 a week, shown rounded to around $380, which brings gross annual rental income to $179,010 ($382.50 x 9 rooms x 52 weeks) and a gross yield of 11.36 per cent on the base project cost.

For an investor bringing $600,000 in cash, usable equity or a combination of both to the table, that $600,000 does not need to cover the full base cost. It is the point at which The Harmony Group’s 118-point method and its wider Harmony Formula, nine bed, high-end, good location, established area, becomes something you can actually act on rather than a number on a spreadsheet. The build itself happens in Melbourne, in the middle ring, Frankston and a smaller area around Geelong, where a nine-bed property does not need special planning approval. Investors themselves come from every state, and the process runs remotely.

The nine rooms and nine bathrooms sit under one title, single storey, Class 1B certified before settlement, with a specialist co-living property manager placing residents rather than a single household tenant. One of the older nine-bed projects, in Melton, has been fully leased for around three years, and Harmony keeps one room set aside so investors can walk through a finished, tenanted example by appointment through a strategy session.

For an investor who wants income while they are still working, rather than only after they stop, that is the appeal: rent that starts arriving from nine separate tenancies rather than one, on a property built and certified for exactly that purpose.

  • 11.36 per cent is the gross yield on this project’s own base project cost, historical or potential rather than a fixed outcome. Average figures based on most recent projects.
  • $600,000 is the floor, not the full purchase price; the rest is financed with a loan, the way any geared property purchase is financed.

How $600,000 Compares in a Standard Investment Property

The table below sets the nine-bed figures alongside a standard investment property at roughly the same price point, so you can see where the $600,000 is actually going to work.

Metric Standard investment property Nine-bed co-living property
Approximate price $1,500,000 $1,574,000 base cost ($1,650,250 including additional considerations)
Weekly rent $865 a week Around $380 a room across 9 rooms
Gross annual income $45,000 $179,010
Gross yield 3 per cent 11.36 per cent on base project cost
Average figures based on most recent projects. Historical average across all delivered projects: 10.8 per cent gross yield.

The gap is not just about yield. At $865 a week and $45,000 a year, a standard investment property at the same price point can leave an investor short once loan interest is paid, depending on their own rate and loan size, particularly with the cash rate sitting at 4.35 per cent, which is where the Reserve Bank left it after its August 2026 meeting. A nine-bed co-living property, by contrast, is designed to produce income from settlement rather than a loss to be claimed at tax time, with nine separate rents doing the work of one. The property is structured differently from the start, room-by-room income rather than a single lease, purpose-built and Class 1B certified rather than converted from an existing house, and priced on gross figures that are historical or potential from the most recent projects, not fixed outcomes.

What Lenders Look at Before You Can Use It

The equity figure you calculate is not automatically the amount a bank will lend you. Every lender is required by APRA to test your ability to repay at an interest rate at least three percentage points above the actual loan rate, a serviceability buffer APRA confirmed was still in place as at May 2026. On top of that buffer, APRA also caps how much of a bank’s new lending can go to borrowers with a high debt-to-income ratio: no more than 20 per cent of new investment and owner-occupier loans combined can go to borrowers at six times income or more. Together, these two settings mean your usable equity, calculated on paper, and the amount a lender will actually approve, can be two different numbers.

The cash rate itself matters too. The Reserve Bank held the cash rate at 4.35 per cent at its August 2026 meeting, with the next decision due later in September 2026. A higher rate does not change your usable equity calculation, but it does change what a lender’s serviceability test will allow, because the buffer is applied on top of whatever rate is current. This is one of the reasons The Harmony Group talks investors through how lenders assess a co-living purchase in a free strategy session rather than working from a generic equity figure. Where a nine-bed co-living property does not fit your equity position, Harmony will say so plainly, honestly, rather than sell you one anyway.

  • Confirm your usable equity figure with a lender before you plan a purchase around it.
  • Ask how the current serviceability buffer and any debt-to-income limit apply to your situation.
  • Treat the cash rate as context for what a lender will approve, not as a reason to delay confirming your own number.

Usable Equity FAQs: What $600,000 Investors Ask

Q: How do I calculate my usable equity?

A: Get a current valuation, multiply it by 80 per cent, then subtract your existing loan balance and any other debt secured against the property. On a $1,200,000 home with $350,000 owing, that is $960,000 minus $350,000, or $610,000. Confirm the figure with your lender before relying on it, since their own serviceability test decides how much of it you can actually use.

Q: Is $600,000 the minimum I need to invest with The Harmony Group?

A: Yes. $600,000 in cash, usable equity or a combination of both is the floor The Harmony Group asks investors to bring to a nine-bed, high-end co-living investment. Average figures based on most recent projects put the full base project cost at $1,574,000, so the $600,000 does not need to cover it, and the rest is financed with a loan, the way any geared property purchase is financed.

Q: Will a bank definitely approve the equity I calculate?

A: Not automatically. APRA requires banks to test your repayment ability at an interest rate at least three percentage points above the actual loan rate, and caps how much new lending can go to borrowers at a high debt-to-income ratio. Your calculated usable equity is a starting point for the conversation with your lender or broker, not the lender’s final decision.

Q: What could a nine-bed co-living property earn on $600,000?

A: Average figures based on most recent projects: a nine-bed property has gross annual rental income of $179,010 and a gross yield of 11.36 per cent on its $1,574,000 base project cost.

Want to Learn More?

The Harmony Group’s team brings 15 years of specialist experience across more than 200 high-yield and specialist accommodation projects, and the approach stays educators-first: real numbers, an honest read on whether your equity position fits, and no pressure to make it work if it does not. A strategy session costs you nothing either: The Harmony Group is paid by the builder at settlement, the same rate from every panel builder, so there is no incentive to steer you toward one option over another.

Citations

For a deeper look, work out your own number with The Harmony Group’s usable equity calculator.

✔
Content reviewed by
Probably Genius
for accuracy and relevance.

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, accountant or the ATO before acting. Past performance is not a guide to future results and historical figures may not be repeated. Any tax or regulatory measures described are announced rather than enacted and are subject to change.


Related reading

About The Harmony Group · The Harmony Method

Recent Posts