Use the borrowing limit in the formula
Maximum debt under the model equals collateral value × LTV. Additional capacity equals max(0, maximum debt − current debt). The maximum function prevents a negative amount from being presented as available borrowing. If debt already exceeds the modeled borrowing limit, the result is zero; the excess can still be calculated separately. Do not substitute the liquidation threshold for LTV, because doing so would answer a different risk question.
Compare two collateral valuations
For a hypothetical $20,000 collateral balance and a 65% LTV, modeled maximum debt is $13,000. Existing debt of $9,000 leaves $4,000 of additional capacity. If collateral falls to $16,000, maximum debt becomes $10,400 and capacity falls to $1,400. Existing debt of $11,000 would produce zero additional capacity under that second valuation, with a $600 excess above the supplied borrowing limit.
Treat capacity as a constrained estimate
Available cash, borrowing caps, isolated collateral rules, and account configuration can reduce actual borrowing room below this arithmetic result. The calculation assumes all entered collateral qualifies for the same effective LTV and uses the same valuation currency as debt. It does not include interest accruing after the snapshot. A positive capacity figure measures the chosen borrowing rule; it does not indicate how much a borrower should use or establish a liquidation buffer.