Equity calculator / leverage calculator

Many property investors use their existing home to secure the deposit for an investment property. This equity calculator shows you how much useable equity you already have in your home. It then shows you how much you could afford to borrow based on that useable equity.

To see what the property might be worth over time, use our capital growth calculator to estimate what the returns of the investment might be.

Outputs from the calculator

Maximum ability to borrow

This is the maximum you can borrow within the Reserve Bank's Loan to Value Ratio restrictions.

You may be able to borrow more than this in some circumstance by securing a 90% loan. It is best to talk to us or a mortgage broker to see whether the banks may be willing to lend to you with a smaller deposit.

Equity

This is the wealth that you personally have in your property. This is calculated by taking the value of your property and subtracting the value of the mortgage.

Useable equity

This is the amount of equity that can be used to secure the deposit for an investment property.

This is calculated by taking your equity (mentioned above) and subtracting 20% of your property's value, which is what we sometimes call the "bank's comfort.

Assumptions

The equity and leverage calculator makes some underlying assumptions:

• That the property you are leveraging is an owner-occupier home, rather than an investment property. Leveraging an investment property requires a higher level of equity in the property, and your useable equity will be lower than what is shown within the calculator.
• That you will purchase a brand new property, which will be leveraged at 80% borrowing. This is the maximum amount you can borrow within the New Zealand Reserve Bank's Loan to Value Ratio restrictions.

This also has implications for the cash flow of the property. Use our property investment calculator to see how the condition of the property impacts the cost to hold it.

One way to create more useable equity is by increasing your payments on your mortgage, which will pay down your principal more quickly. To calculate your mortgage repayments, use our mortgage calculator.

You may also want to see whether the property will earn you money each week, or require an additional investment to keep going. Use our rental yield calculator to run these numbers.