Using your home equity to borrow more money

Did you know, you may be able to use the equity in your home to fund your next big purchase? Here’s a quick guide that explains how home equity works and the benefits of using this to get your next loan.


What is home equity?

Home equity is the difference between the market value of your property and the amount still owing on your home loan. So if the market value of your home is more than the amount you owe, you may be able to use this to get a loan.


How to work out your home equity

First you’ll need to understand the market value of your property. This may involve checking out sources such as QV. A registered valuation of your home will give you an expert opinion.

To calculate your equity:

  1. Take the market value of your home

  2. Subtract the amount you owe on any lending secured by the property.

For example, if the market value of your home is $500,000 and your total lending amount is $200,000, then your equity would be $300,000

Did you know?

If you decide to take out a loan using your equity, please remember the RBNZ loan- to-value ratio (LVR) restrictions may apply. So you may need to have at least 20% equity in your house after new lending is taken out. Talk to us to see how we can help you.



Benefits and risks of using equity in your home


  • Your home loan interest rate will generally be lower than on a personal loan or credit card.
  • It’s convenient and easy to manage when all your loan payments are rolled in one.
  • You can spread the cost over a longer period compared to a personal loan.
  • As long as you can afford the loan,  you can use these funds for a variety of reasons– for example, to buy an investment property, do home renovations, fund a holiday or boat, or pay off other debt.


  • If house prices go down, you may end up with a loan that is more than what your home is worth.
  • If your income changes, you’ll still need to make the payments on your loan.


Common ways to create equity

Making improvements to your property may increase its value and may increase your equity in your home. However this will depend on how much you borrow to renovate and what the market value of your home is after the improvements.

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Other helpful guides

ASB’s lending criteria, terms and fees apply. A Low Equity Margin may apply.

The above information is a guide only and should not be relied on as it does not take into account your personal financial situation.

Home loans Using your home equity to borrow more money