Equity decision helper

How the helper reads your numbers

The helper starts with the simplest figure, paper equity: what the property might sell for, less everything already secured against it. That number is almost always bigger than what a lender would advance, so the helper then converts it into usable equity at three combined loan-to-value (LVR) bands. Combined LVR means the first mortgage, anything else on the title and the new second mortgage added together, divided by the property's value.

For a house or unit the bands are 60%, 70% and 80%. For commercial property they drop to 50%, 60% and 70%, because shops, offices and warehouses tend to take longer to sell and are usually lent against more cautiously. These are planning bands that help you see the shape of the decision. They are not a promise of what any lender will do, and a formal valuation can come in lower than your own estimate.

Why the cushion matters more than the maximum

It's tempting to look at the highest band and treat it as the answer. We'd suggest the opposite. The cushion is the share of the property's value that stays unencumbered once the new loan is in place. A healthy cushion is what lets you refinance later, sell without being forced, or ride out a slow quarter without the property becoming the problem. When a plan only works at the top band, that is usually the moment to pause and look at the alternatives to a second mortgage.

What "go", "think again" and "alternatives" mean

• Looks workable: the amount fits comfortably inside the middle band, the exit is specific and the timeframe is realistic. Worth a conversation.
• Think again: the numbers can work, but something needs attention first, such as a thin cushion, a vague or slow exit, or a purpose that doesn't suit a short-term secured loan.
• Look at alternatives first: the amount sits outside the property-secured range of $20,000 to $5,000,000, or it would push the combined LVR past the top band. A different structure is likely to be kinder to you.

The read-out also flags things that are easy to overlook. For example, general interest charge on ATO debts incurred from 1 July 2025 is no longer tax deductible, which changes how some owners compare a tax payment plan with other funding. If you're using the family home, the helper reminds you to plan the exit around more than just the numbers. Our page on planning the exit from day one goes deeper.

Questions for the person whose name is on the title

If someone else co-owns the property, they will need to sign the mortgage, and they deserve the full picture before they do. The helper builds a short list of questions from your inputs so the conversation starts with the right things: what happens if the business has a bad year, what the exit really depends on, and whether everyone is comfortable with the worst case. Our guide to talking it through with a co-owner has more.

What the helper doesn't do

It doesn't ask for an interest rate, because second mortgages are priced on each borrower's circumstances and an invented rate would only mislead. It doesn't store anything. And it can't see the things a specialist will ask about, such as how the business is trading, what else you owe and how certain the exit is. Treat it as a way to arrive at a conversation already knowing your numbers. When you're ready, the 60-second enquiry is the next step, and the exit plan checklist is a good companion.