Equity is not free cash
- Jul 22
- 2 min read
Updated: Jul 22
When a property rises in value or its loan balance falls, the owner may build equity. But equity on paper is not the same as money that is ready to spend.
BV Finance graphic explaining that property equity is not free cash because using it creates new debt Mortgage broker explaining equity, new debt and cash-flow buffers to property investors BV Finance guide comparing total equity, usable equity, accessing equity and borrowing power
The latest ABS figures show that the number of new investor loan commitments fell 5.3% in the March quarter 2026, yet remained 18.8% higher than a year earlier. Investors are still active, so it is worth separating equity from new borrowing before looking for the next property.
Total equity and usable equity are different
Total equity = lender valuation − current loan balance.
Usable equity is usually lower. The amount depends on the lender’s valuation, the target loan-to-value ratio (LVR), the loan product and lender policy. Your own estimate of the property’s value does not replace a lender valuation.
Accessing equity means taking on new debt
Accessing equity normally means creating a new loan split or increasing debt. That changes repayments, and the purpose of the borrowed funds should be kept clear in your records.
Equity does not prove you can afford another loan
A lender still assesses income, existing liabilities, living expenses and the holding costs of both properties. The amount available against the property and the amount you can comfortably repay are separate questions.
Four figures to test before investing
• Lender valuation
• Usable equity
• The new repayment
• Your cash buffer
Do not only ask, “How much can I access?” Ask, “Will the cash flow still work afterwards?”
General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.
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