Private first mortgage on residential property for your business

For most Australian business owners, the biggest pool of equity they have isn’t in the business. It’s in a house: the family home, a rental bought years ago, a unit that was once the first home. A private first mortgage over residential property turns that equity into business funds, either on a property owned outright or by paying out the current lender and taking first position.

Residential property supports the highest lending of any security we accept, up to 80% of value, because it has the widest pool of buyers. This page covers which homes work, what changes between them, and what to sort out before you apply. If you’d rather keep your home loan where it is and borrow behind it, see the second mortgage on your home page instead.

Which residential properties can secure a first mortgage?

Almost any standard home in a reasonable location. Here’s how the common types are viewed:

Residential property	Usually viewed as	What we’ll want to understand
House on its own block, metro or major regional	The strongest residential security	Who lives there and who owns it
Townhouse or villa	Strong	Strata or community scheme details
Unit or apartment	Strong in established areas	Size, building condition, any known defects
Duplex or dual-occupancy	Strong where separately titled	Whether each side has its own title
Tenanted investment property	Strong	The lease and the rent being received
Holiday home	Good, location-dependent	How deep the local buyer market is
House on large acreage	Considered, with lower lending	See our rural property page

A title search shows the registered owners and other registered interests, such as mortgages, easements, covenants, leases and caveats, so whatever is on the title will come up early. It helps to know what’s there before you enquire.

How much can a residential property support?

Up to 80% of value. On a debt-free property, that ceiling is the maximum total loan. On a refinance, the existing debt is paid from it first and the rest is available for the business.

Moneysmart describes the loan to value ratio as the loan amount expressed as a percentage of the asset’s value. Lending well below the ceiling isn’t required, but it does strengthen everything else: it can offset a patchy credit history, a thin paper trail or a less certain exit.

There’s no sworn valuation. We assess value ourselves, so you won’t be asked to book an inspection or pay for a report. If you want a rough idea before you call, the equity calculator gives a quick estimate, and our page on how much equity you can use explains the arithmetic.

Can your own home secure a business loan?

Yes, and plenty of owners choose to. The family home is often the property with the most equity and the least debt. Two things are different when the security is where you live.

The purpose must be business. These loans fund the business: tax debts, stock, equipment, a partner buyout, a premises purchase, working capital. They aren’t available to buy a home, renovate one for the family, or for any personal use.

Everyone on the title signs. If your spouse or a family member co-owns the home, they sign the mortgage too, and may be asked to guarantee. Anyone giving security for a business they don’t run should take independent legal advice first. Our page on third-party security covers how that works.

The ATO lists interest on money borrowed to produce assessable income among deductible business expenses, and deductibility generally follows the use of the funds rather than the property behind them. Your accountant can confirm the position for your structure.

What about an investment property with tenants?

A tenanted residential investment is excellent security. The tenancy simply continues: tenants don’t need to be told and nothing changes for them. Supplying the current lease and a recent rent statement up front answers the obvious questions about occupancy and upkeep.

Investment properties are also a common way to keep the family home out of the arrangement altogether. If you own both, offering the investment as security means the home stays untouched. See releasing equity from an investment property for that route.

Illustrative example: a rental property funds a growth order

A Brisbane joinery business wins a supply contract for a new apartment project but must buy machinery and materials before the first progress payment. The two directors own a rental townhouse in Carina outright and don’t want to touch their own homes.

Illustrative: the townhouse is assessed at around $900k. They need $350k. A first mortgage of $370k (about 41% of value, well inside the 80% residential ceiling) covers the machinery, materials and costs. Interest is capitalised for the first 6 months, so there are no repayments while the contract ramps up. Tenants stay in place throughout. The exit is a bank refinance once the business’s next set of accounts shows the new contract income, or repayment from progress payments if those arrive first. Figures are illustrative only.

If your situation looks something like this, check your loan in about a minute.

Does a unit or townhouse in a strata scheme need anything extra?

A little. The mortgage is registered over your own lot, so the body corporate or owners corporation doesn’t sign anything and doesn’t need to approve the loan. What helps is showing the scheme is in reasonable shape:

• the latest levy notice, showing levies are paid up;
• any notice of a special levy for major works;
• a note of any known building defects or rectification work under way.

Large special levies or serious defects don’t rule a unit out, but they affect how buyers see it, so they affect the assessment. Mention them on the first call rather than letting them surface later.

What slows down residential first mortgages?

Usually something about ownership rather than the property:

• A co-owner who’s hesitant or hard to reach. Talk to them before you enquire.
• A company or trust on the title without its documents to hand. See company or trust-owned property.
• A second loan or caveat on the title that wasn’t mentioned.
• A deceased estate, where the property hasn’t yet been transferred into the beneficiaries’ names.
• A separated couple, where a property settlement hasn’t been finalised.

None of these rules a loan out. They just need to be on the table on the first call so the timetable is realistic.

How does a residential first mortgage end?

With your exit. Our terms are open: no minimum, no maximum, and no penalty for repaying early. Common exits on residential security are a bank refinance once the business’s figures catch up, the sale of the property, or a large business receipt. Plan it before you borrow, not after. Our guide on exit strategy for a short-term mortgage shows what makes one believable.

Own a home or rental with equity? See if you qualify

For most business owners, the equity in a house is the quickest and least complicated route to serious business funding. If you have it, it makes sense to find out what it can do.

The loan check takes about 60 seconds and finding out won’t affect your credit score. Your enquiry comes directly to one lender, and is never passed around to a crowd who all phone you at once. A residential lending specialist looks at your property and plans and calls you personally. Please answer accurately about who owns the property and what’s owing, so we can give you the right answer from the start.

Check what your home or rental can raise →