Quick answer
Owning property with equity opens the widest range of business loans, from $20,000 to $5,000,000, over longer terms. It's usually the best choice for larger amounts, multi-year needs and owners with credit marks. But it isn't always best: for small or short needs, asset finance or unsecured lending can keep your property out of it. Use property when the size or term of the need justifies it.
Key points
- Property-secured business loans range from $20,000 to $5,000,000.
- Property security suits large, long-term needs and complex credit situations.
- Second mortgages and caveat loans use equity without refinancing the first mortgage.
- For small or short needs, keeping property out of it is often wiser.
- Range
- $20,000 to $5,000,000
- Best for
- Larger, longer or complex needs
- Keep it out for
- Small, short-lived needs
If you own a home or commercial property with equity, you hold the key that opens most doors in business lending. The Reserve Bank’s October 2025 Bulletin notes residential property secures most small business loans. The question isn’t whether you can use it. It’s whether you should, and how.
How can property secure a business loan?
- First mortgage: refinancing or taking a new first mortgage, often on an unencumbered or commercial property.
- Second mortgage: a registered mortgage behind your existing first mortgage.
- Caveat loan: a short-term loan secured by a caveat on the title. Land Use Victoria explains a caveat puts others on notice that a third party may have rights over the property.
Property-secured business loans range from $20,000 to $5,000,000, residential or commercial security, for business purposes only.
When should you use property, and when not?
| Situation | Use property? | Why |
|---|---|---|
| Buying a business or premises | Usually yes | Large amount, long payback |
| Refinancing debts into one | Usually yes | Longer term, one repayment |
| Credit marks or tax debt | Often yes | Security widens options |
| Short gap with a dated exit | Yes, short-term | Caveat or short second mortgage |
| A vehicle or machine | Often no | Asset finance keeps property out |
| A small, short-lived need | Often no | Unsecured is simpler |
Our verdict
Our verdict: use property when the size or term justifies it
- Best for
- Larger amounts, multi-year needs, business purchases, refinancing, and situations where credit or tax issues narrow unsecured options.
- Not for
- Small or short needs better served by asset finance or unsecured lending, or any loan without a realistic repayment plan.
- Check before you sign
- Your existing mortgage terms, all co-owners' involvement, the term, repayment type and costs of discharging the mortgage later.
Property security wins on scale, term and flexibility. It can fund what unsecured lending can’t, over terms that keep repayments manageable. It’s the strongest option for owners with credit marks.
It loses when it’s more than the job needs. Putting your home on the line for a ute that could secure itself, or a small stock purchase that pays back in months, adds risk without much benefit. See secured versus unsecured.
First or second mortgage? If your first mortgage has good terms, a second mortgage avoids disturbing it. For short needs with a firm exit, compare caveat loans and second mortgages.
Tell us about the property and the need, or let the Loan Finder rank structures for you.
Illustrative example: one owner, two decisions
Illustrative only. A printing business owner has significant equity in his home.
- Buying out a retiring business partner: a large amount repaid over years. Verdict: property-secured second mortgage, leaving his first mortgage untouched.
- A new delivery van: asset finance. Verdict: keep the home out of it.
What should property owners check first?
- Your first mortgage terms. Some restrict further security.
- Who owns the property. Every owner usually needs to sign. Trust or company ownership adds documents.
- The purpose. Business purposes only.
- Your repayment plan. If the business can’t repay, the property is at risk.
- Total cost. Valuation, legal and discharge costs add up. Use the total cost comparer.
For acquisitions, see the best way to finance buying a business. If credit marks are why you’re considering property, read the best loan when your credit has marks.
How much equity is “enough”?
Equity is the property’s value minus everything already owed against it. Lenders don’t lend against all of it; they leave a margin in case values fall or costs arise in a sale. How much margin depends on the property type, location, the loan structure and the lender’s own policy. A suburban house is usually viewed differently from a rural block or a specialised commercial building.
A practical way to think about it:
- Get a realistic value. A recent sale nearby or an agent’s appraisal is a start; the lender will order its own valuation.
- Subtract existing mortgages, including any redraw you’ve used.
- Expect the usable portion to be noticeably less than the raw difference.
If the usable equity is thin, the options narrow: a smaller loan, a combination with asset finance, or a different structure altogether.
Common mistakes property owners make
- Using property for everything. Securing a small, short need against your home adds risk without much benefit.
- Ignoring the first mortgage. Some loan contracts restrict further borrowing against the property. Breaching them can create problems with your main lender.
- Forgetting co-owners. A spouse, partner or family trust that co-owns the property will need to be involved and sign.
- Borrowing to the limit. Leaving headroom protects you if values soften or you need a top-up later.
- No plan to reduce the debt. A business loan secured on your home should have a clear repayment path, not just a manageable monthly figure.
Used thoughtfully, property is the strongest tool in business lending. The key is matching its use to the size and length of the need.
Is commercial property treated differently?
Often, yes. Lenders may view commercial and residential security differently, so mention the property type early.
Equity in the picture?
Tell us about the property, any existing mortgage and what you need. A specialist will tell you whether using it makes sense, and if so, which way.
There’s no credit check just to ask, and your details stay with one person. Accurate details on ownership, the existing loan and estimated value save time for everyone.
Frequently asked questions
Can I use my home as security for a business loan?
Yes. Residential property, as well as commercial property, can secure business loans through a first mortgage, second mortgage or caveat. The loan must be for business purposes.
Should I refinance my first mortgage or take a second mortgage?
If your first mortgage has good terms and would be costly to break, a second mortgage leaves it untouched. If you want one loan and the first mortgage is due for review anyway, refinancing may be simpler.
How much equity do I need?
It depends on the property, its value, existing debts and the lender. More equity gives more options. A valuation is usually part of the process.
What if the property is owned with a partner or in a trust?
All owners generally need to be involved and sign. Trust-owned property brings extra documentation. Raise it early so it doesn't cause delays.