Buying equipment and machinery with property equity

For a new truck or a standard forklift, equipment finance is hard to beat. The financier lends against a machine it understands, it can be approved in days, and the term matches the asset’s working life.

The trouble starts when the machine is not standard. A 15-year-old excavator at a clearing sale, a European packaging line from a closed factory, a CNC router that only three businesses in the state could use, a crane bought from a liquidator with payment due by Friday. The financier wants a newer asset, a longer lead time or a bigger deposit. Meanwhile the sale goes to someone else.

If you own property, there is another way. Borrow against the real estate, buy the machine outright, and then decide how to repay at leisure.

When does property equity beat equipment finance?

Asset financiers secure their loans on the equipment. That works when the equipment is easy to identify, insure and resell. It falls apart in a few predictable situations:

• Age. Many financiers set a maximum age at the end of the term, so older machines get shorter terms or nothing.
• Specialisation. Custom-built, imported or niche machinery has a thin resale market.
• Private and auction sales. No dealer, no tax invoice in the expected form, and payment due within days.
• Bulk or mixed lots. A group of assets from a business that is shutting down, some of which would not qualify alone.
• Repairs and refits. Money for an engine rebuild or a refit doesn’t create a new asset a financier can take.
• The business, not the machine. A financier may decline because the business is new, has ATO debt or has had a rough year, even though the director owns property with plenty of equity.

In each case, property security sidesteps the objection. The real estate is the security, so the machine’s age, origin and resale value matter far less. ATO debt and past credit problems are considered case by case.

How it works

1. Lock in the purchase. Get the invoice, auction terms or sale agreement, with the payment date.
2. Do your PPSR checks. Search the serial number and the seller. More on this below.
3. Enquire. Property details, what is owing on it, the purchase price plus transport and setup, and the repayment plan.
4. Choose the security. A caveat loan for a quick, short purchase; a second mortgage behind your bank; or a private first mortgage over debt-free property for a longer term.
5. Settle and pay the seller. Funds can be paid directly to the auction house, the liquidator or the vendor.
6. Repay or refinance. From cash flow, from contract income, or by refinancing the now-owned machine onto equipment finance.

Payment due before your financier can move? Send an equipment funding enquiry now; it takes about a minute.

Do the PPSR checks before you pay

This is the step buyers skip, and it is the one that hurts most. The Personal Property Securities Register says that if you are buying high-value goods privately you should do a $2 PPSR search first. A registration may mean there is money owing on the goods. If you buy goods with a registered security interest without searching, you risk having them repossessed even though you have paid for them.

• Search by serial number where the machine has one recorded.
• Search the seller. If the seller is a company, the PPSR’s $2 organisation search on its ACN shows the security interests registered against its assets, though not the amounts.
• Keep the certificate. The PPSR says the search certificate is proof of whether an interest was registered at that time.
• Ask for a release. If a financier is registered, the seller must clear the debt and have the registration removed at or before payment. Your solicitor can make payment conditional on that.

Equipment funding options compared

Option	Typical speed	Security	Suits	Limitations
Chattel mortgage or hire purchase	Days to a week	The machine	New or late-model standard equipment from a dealer	Age limits, deposit requirements, slower for private sales
Operating or finance lease	Days to a week	The machine (lessor owns it)	Assets you plan to upgrade	You don’t own it; residuals and end-of-lease terms
Unsecured business loan	1–3 days	Director guarantee	Small, fast purchases	Daily or weekly debits, smaller amounts
Bank loan secured on property	Weeks	Real estate	Long-term, planned purchases	Full credit process; may not meet an auction deadline
Private loan secured on property	Same day to 48 hours possible	Real estate	Older, specialised or auction machinery; urgent purchases	Short term; costs more than bank money

The broader comparison is on secured vs unsecured business loans.

Who it suits

• Earthmoving, civil and construction businesses buying used plant. See construction and trades.
• Manufacturers buying a line from a plant that has shut or importing specialised machinery. See manufacturing and industrial.
• Farmers and contractors buying at clearing sales, where rural property is considered case by case.
• Transport operators with an older prime mover or trailer the financier won’t take.
• Any business that has won work requiring a machine it doesn’t have yet. Read funding a big contract with property security.

When this isn’t the right move

• New equipment from a dealer, bought on a normal timeline. Standard equipment finance is likely cheaper over the asset’s life. Use it.
• A machine that will take years to pay for itself. A short-term loan needs an exit within months, not five years of instalments. If refinancing onto equipment finance afterwards is uncertain, don’t rely on it.
• A speculative purchase. If there is no work lined up for the machine, the repayment depends on hope.
• Very small items. A $6,000 tool is better bought from cash flow or a card than with a secured loan carrying legal costs.
• When you might lose the property. Using your home for a business purchase is a serious commitment. Talk it through with your accountant before you sign.

What it costs (without the guesswork)

There is no published price list. Pricing is worked out per deal from the property, the amount borrowed against it, the term and the strength of the plan to repay, and the target is the lowest price that particular combination allows. Expect these components:

• Interest, prepaid or capitalised so the machine can start earning before anything is repaid.
• An assessment fee, set for each loan and shown in your Letter of Offer.
• Legal and registration costs for the security and its later discharge.

There is no formal valuation required on the property. Compare the total dollar cost of a three- or six-month property loan with what you lose by missing the purchase: hire charges for a substitute machine, a contract you can’t start, or a better-priced asset gone to another bidder. That comparison is usually what decides it.

A caveat or second mortgage costs more than a first mortgage, because the lender stands behind the bank on the title.

Documents you’ll need

• Identification for borrowers, directors and guarantors.
• Property details and current statements for any existing loans on it.
• The tax invoice, auction terms or sale agreement for the machine.
• PPSR search certificates for the serial number and the seller.
• Evidence of the exit: work schedule, contract, or an equipment refinance indication.

How fast

Funding is possible within 24 to 48 hours for up to $5m once documents are in, and amounts from $20k to $250k secured on property are possible same day. Auction houses and liquidators often set short payment windows, so enquire before the sale, not after the hammer falls.

Illustrative example: a used excavator bought at auction, then refinanced

Illustrative example: A Toowoomba civil contractor wins a used 30-tonne excavator at auction for $185,000 plus GST and buyer’s premium, with payment due in five business days. The equipment financier won’t fund it because of its age. The owner’s home is worth about $850,000 with $310,000 owing. At an illustrative 70% band on total debt, the home supports about $595,000 in total borrowing, leaving headroom of about $285,000.

Waterfall	Amount
Hammer price	$185,000
GST and buyer’s premium (approximate)	$27,000
Transport and inspection	$8,000
Total to fund	$220,000
Capitalised interest, 4-month term	set per deal
Assessment fee and legal costs	set per deal
Headroom check	inside the $285,000 illustrative headroom
Exit	GST credit on the next BAS, plus contract income and a part-refinance once the machine is owned

The contractor pays the auction house on time, gets the machine to site the following week, and claims the GST credit on the next BAS. Within four months, contract income and the GST refund repay the loan. For local notes on Darling Downs security, see our Toowoomba page.

A pre-sale checklist for auction and private machinery buyers

Most problems with second-hand equipment purchases are visible before the money moves. Run through this list first:

• Inspect, or pay someone who can. A mechanic’s report on hours, wear and service history is cheap compared with a seized engine.
• Read the sale terms. Payment deadline, buyer’s premium, whether GST is added, and when you must remove the asset.
• Confirm title. PPSR searches on the serial number and the seller, plus a written statement that the goods are unencumbered.
• Price the whole job. Transport, permits for oversize loads, set-up, certification and any immediate repairs.
• Check insurance. Your insurer may need details before the machine is moved or used.
• Know your exit. Which contract or income stream repays the loan, and whether a financier will refinance the machine once you own it.

Bring this to your enquiry and the loan can be sized to the real cost, not just the hammer price.

Tax points to raise with your accountant

• The ATO’s instant asset write-off page, last updated in August 2026, lists a limit of $20,000 per asset first used or installed ready for use on or after 1 July 2023, for businesses with aggregated turnover under $10 million that use the simplified depreciation rules. The cost must be less than the limit.
• Assets costing the limit or more go into the small business pool instead.
• Interest on money borrowed for a business purpose is generally deductible. See is business loan interest tax deductible.

Related reading

If you already own the machine and the problem is a large final payment on its finance, read balloon payments. If the purchase is part of growing into new premises or a second site, see business expansion funded by property.

See if you qualify before the payment window closes

An auction deadline or a liquidator’s payment date leaves no room for a lender who goes quiet. Enquiring involves no credit check. You deal with one direct lender, not a broker shopping your file around. A specialist reads what you send. Be precise about the property, what is still owing on it and how the machine will pay its way, and the first answer will be the dependable one.

Ask whether your property can fund the machine, or start with an overview of secured business loans.