Equity toward the next purchase
Equity recycling calculator.
Equity recycling means using the usable equity in property you own (the part of your equity a lender may let you borrow against, up to its LVR cap, before it checks your income) as the deposit and costs for the next purchase, then repeating as values change. This tool models that on your assumptions, starting from an editable example.
Net equity
$4.2m
Portfolio value less total debt; the card shows the final year.
Purchases
6
How many purchases the model makes on equity alone over the period, up to your limit. It does not test whether a lender would fund them.
Portfolio value
$9.5m
Your home plus each property bought, grown at your rate.
Total debt
$5.2m
Your home loan, plus each new loan and each equity release.
Rent less interest
-$3,615
Rent on the investment properties less interest on all debt, before other costs and tax; the card shows the final year.
On these assumptions the model makes 6 purchases, the last in year 9, and ends 15 years on with about $4.2m in net equity, before holding costs, tax and any lender's income test.
Year by year
| Year | Purchase | Portfolio value | Total debt | Net equity | Rent less interest |
|---|---|---|---|---|---|
| 1 | $600,000 | $1,627,500 | $1,150,000 | $477,500 | -$44,300 |
| 2 | $1,708,875 | $1,150,000 | $558,875 | -$42,950 | |
| 3 | $661,500 | $2,488,894 | $1,844,575 | $644,319 | -$54,829 |
| 4 | $2,613,338 | $1,844,575 | $768,763 | -$51,852 | |
| 5 | $729,304 | $3,509,774 | $2,610,344 | $899,430 | -$63,385 |
| 6 | $765,769 | $4,489,320 | $3,414,401 | $1,074,919 | -$73,854 |
| 7 | $4,713,786 | $3,414,401 | $1,299,385 | -$66,963 | |
| 8 | $844,260 | $5,835,949 | $4,300,875 | $1,535,074 | -$76,696 |
| 9 | $886,473 | $7,058,543 | $5,231,672 | $1,826,872 | -$85,016 |
| 10 | $7,411,471 | $5,231,672 | $2,179,799 | -$73,048 | |
| 11 | $7,782,044 | $5,231,672 | $2,550,373 | -$60,483 | |
| 12 | $8,171,146 | $5,231,672 | $2,939,475 | -$47,289 | |
| 13 | $8,579,704 | $5,231,672 | $3,348,032 | -$33,435 | |
| 14 | $9,008,689 | $5,231,672 | $3,777,017 | -$18,888 | |
| 15 | $9,459,123 | $5,231,672 | $4,227,452 | -$3,615 |
These figures carry your assumptions forward. They are not a forecast, and property values can fall. Past performance is not a guarantee of future results. Individual results vary.
How it is worked out
- Each year, works out usable equity across everything you own: total value times your LVR cap, less total debt. Usable equity is the part of your equity, the value less what you owe, that a lender may let you borrow against, before it checks your income.
- Grows the next purchase price from today's dollars at your growth rate.
- If usable equity covers the deposit and costs on that price (the part above your cap, plus your purchase costs), the model buys one property that year.
- The new property carries its own loan at your cap, and the deposit and costs come from an equity release against what you already own. The model keeps each loan separate rather than cross-secured, where one loan is secured over several properties; that is a modelling choice, not a view on how to structure your loans.
- Makes at most one purchase a year, up to your limit.
- Grows every property, including your home, at your growth rate. All debt is interest only at your rate.
- Works out each year's rent as your gross yield on the investment properties' value at the start of that year, so rent rises in line with value, then takes off interest on all debt, before other costs and tax.
What this tool leaves out
- Your income and borrowing capacity. A lender tests whether you can repay every loan; this tool does not.
- Holding costs and tax: rates, insurance, management, vacancy, land tax, and the tax effect of a rental loss, including the negative gearing rule from 1 July 2027 for established homes acquired after 7:30pm AEST on 12 May 2026.
- Cash shortfalls. Where rent does not cover interest and costs, the gap comes from your income each year.
- Uneven growth. Real values move at different speeds in different places, and can fall.
- Lender policy, bank valuations and lenders mortgage insurance (LMI). A bank's valuation may come in below the value you enter.
Questions investors ask
Does this tell me how much I can borrow?
No. It looks only at equity: value, debt and a lender's cap. A lender also tests your income, expenses and other debts, and that test often sets the real limit. A mortgage broker can assess your borrowing capacity.
What is LVR?
The loan-to-value ratio (LVR) is the loan as a share of the property's value. The cap you choose is the highest LVR the model borrows to. Lenders mortgage insurance (LMI) usually applies when the loan is above 80% of the property's value, and it protects the lender, not you.
Why does every property grow at the same rate?
To keep the model readable. In practice your home and each investment grow at different rates, and in some years values fall. Try a lower rate to see how much the result depends on it.
Why only one purchase a year?
Each purchase takes a search, a valuation and a fresh lending assessment. One a year keeps the model closer to how purchases tend to happen.
Where does the rent go?
The results show rent less interest each year, before other costs and tax. The model does not reinvest a surplus or fund a shortfall, so if interest is more than the rent, that gap and the other holding costs come from your pocket.
Is equity recycling right for me?
That depends on your income, your buffers, your goals and how you feel about debt. Gearing is borrowing to invest, and it magnifies results in both directions. Talk it through with a mortgage broker and your accountant, and with us on the property side.
Where to next
If the model has you thinking about a next purchase, we can map it out with you and your broker.
This calculator gives general information only. It models equity on the assumptions you enter; it does not assess your income, expenses or borrowing capacity, it is not a pre-approval, and growth, rent, costs and interest rates are assumptions, not forecasts. It is not financial, credit or tax advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Borrowing to invest increases risk as well as potential return. Past performance is not a guarantee of future results. Individual results vary. CHAD Property coordinates with brokers, accountants and planners and does not give credit or financial advice, so speak with a mortgage broker and your accountant before you act.
The tools on this page give general information only. Each result is an estimate, worked out from the figures you enter and the assumptions shown, using rates and rules as at the date shown. It is not a quote, and it is not intended to be relied on to make a decision about a financial product, a loan or your tax. It is not personal financial, tax, credit or legal advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Rates, thresholds and laws change, and some details of recent changes are not yet final. CHAD Property is a buyer's agency. It does not hold an Australian financial services licence or an Australian credit licence, and it is not a registered tax agent. We do not advise on tax, lending, financial products or how to structure ownership, including through a self-managed super fund, a company or a trust; we work alongside the brokers, accountants and financial planners who do. Before you make a financial decision, consider getting advice from a licensed financial adviser, and check any figure here with a licensed or registered professional who knows your situation.