How Much Equity Will You Have in 5 or 10 Years?

The short answer

Your equity in 5 or 10 years is simply your home's projected value minus what you still owe on the loan. Both numbers move in your favour over time: the property grows at an assumed growth rate while your loan balance shrinks with every repayment. Your loan-to-value ratio (LVR) is the loan balance divided by the property value, expressed as a percentage, so as equity rises, your LVR falls.

How equity and LVR work in Australia

Equity is the value of your home less the money still owing on your mortgage (Moneysmart). Two forces build it over a 5- or 10-year horizon:

• Capital growth. If your property appreciates, your equity grows even if you never pay down a cent. Future value isn't knowable, so True Loan asks you for an annual growth-rate assumption and compounds it: value × (1 + growth)^years.
• Principal paid down. Each repayment on a principal & interest loan reduces the balance. Early on, most of the repayment is interest; the principal portion accelerates over time. Interest-only periods leave the balance flat, so during those years equity only grows through capital growth.

LVR is then loan balance ÷ property value × 100 (Moneysmart). It matters because lenders generally waive Lenders Mortgage Insurance once your LVR sits at or below 80%, and a lower LVR can unlock usable equity for renovations or another purchase. "Usable equity" is commonly framed as the gap between 80% of the current value and what you owe.

Things that speed equity up: a constant offset balance (interest accrues on loan minus offset, so the balance falls faster), extra monthly repayments, and faster-than-assumed capital growth. Things that slow it down: interest-only periods, redraws, and weaker growth.

Worked example

Take a first home buyer in NSW buying an $800,000 home with a 10% deposit ($80,000), borrowing $600,000 over 30 years at 6%, principal & interest, monthly. As a first home buyer at or below $800,000, NSW transfer duty is exempt (Revenue NSW). The monthly repayment is roughly $3,597.

Assume property growth of 4% per year. Here's how equity and LVR project out:

Time	Property value (4% p.a.)	Loan balance	Equity	LVR
Settlement	$800,000	$600,000	$200,000	75.0%
5 years	$973,000	$559,000	$414,000	57.5%
10 years	$1,184,000	$504,000	$680,000	42.6%

The maths is checkable. Property value compounds: $800,000 × 1.04^5 ≈ $973,000 and × 1.04^10 ≈ $1,184,000. The loan amortises slowly at first (after 5 years you've repaid only ~$41,000 of principal, because early repayments are mostly interest). Equity is the difference, and LVR is loan ÷ value. At a 10% deposit this loan would normally attract LMI of roughly $10,740 (~1.79% of the loan at the 90% LVR band), though buyers using the First Home Guarantee with a 5% deposit can avoid LMI entirely within the price caps.

Change one assumption and the picture shifts. Add a $500/month extra repayment and your 10-year balance drops further, pushing equity above $700,000. Drop growth to 2% and your 10-year value is closer to $975,000, with equity around $471,000. That spread is exactly why you model your own numbers rather than rely on a single projection.

Model this in True Loan

Open the True Loan calculator and set:

• Property value and Loan amount (use your raw loan, e.g. $600,000).
• Interest rate, term, repayment frequency and P&I vs interest-only.
• Property growth rate, which drives the projected value. Try a conservative and an optimistic figure.
• Offset balance if you keep savings in an offset, entered in the dedicated Offset balance input (this reduces the interest charged, clearing the loan sooner).
• Extra repayment ($/month), a separate input from offset; use it for regular additional principal.

The timeline then shows remaining debt, projected value, equity and LVR year by year. Want to test 4% vs 2% growth, or with-offset vs without? Run both side by side on the comparison tool, where every scenario is shareable via URL.

Common questions and mistakes

Does paying extra change my projected equity? Yes. Extra repayments and a sustained offset both lower the future loan balance, so equity at 5 and 10 years is higher. They're separate inputs in True Loan.

Is the growth rate a prediction? No. It's an assumption you choose. Property values can fall as well as rise, so test a low growth figure too.

Does interest-only build equity? Only through capital growth during the interest-only period. The balance stays flat, so no principal-based equity accrues until you switch to P&I.

Will my LVR hit 80% sooner from growth or repayments? Usually growth moves the needle faster in the early years, because early P&I repayments are mostly interest. See what is LVR and how to calculate it.

Can I use equity to buy again? Lenders typically lend against equity up to an 80% LVR ceiling; the usable-equity guide walks through the sum.

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These figures are estimates based on the assumptions you enter, and property growth is never guaranteed. This is general information, not financial or credit advice. Check official sources such as Moneysmart, the ATO, your state revenue office and Housing Australia before deciding anything.