Quick answer
If you own an investment property — a rental home, unit or commercial premises — you may be able to use it as security for a business loan instead of the family home. Property-secured business loans run from $20,000 to $5,000,000 over residential or commercial property. It keeps your own home out of the documents, but the investment property is still at risk, and the rental income it earns may be affected if things go wrong.
Key points
- An investment property can carry the security, keeping the family home off the loan.
- Residential and commercial properties can both be used.
- Existing investment loans, tenancies and ownership structures all affect the options.
- The property is still at risk — so is the income it earns.
- Property types
- Residential or commercial
- Secured range
- $20k – $5m
- Security
- First mortgage, second mortgage or caveat
- Purpose
- Business purposes only
For owners who’ve built up some property over the years, there’s often a middle path between “put the house up” and “unsecured only”. If you own a rental home, a unit, a holiday house or a small commercial property, it may be able to carry the security for a business loan — leaving the roof over your family’s head out of the documents.
Why use an investment property rather than your home?
For most people, it’s about peace of mind. The family home is where the kids sleep. An investment property matters financially, but losing it wouldn’t mean moving the family.
Other practical reasons:
- More equity may be available in an investment property than in a home with a larger mortgage.
- A co-owner of your home may not want to be involved — see borrowing against a home in joint names.
- You want to keep household and business borrowing clearly apart.
What kinds of property can be used?
Property-secured business loans run from $20,000 to $5,000,000 over residential or commercial property. That can include:
| Property | Things lenders consider |
|---|---|
| Rental house or unit | Value, location, existing loan, tenancy |
| Holiday home | Value and location; how it’s used |
| Commercial premises | Lease terms, tenant, zoning, value |
| Vacant land | Often more limited options — ask |
| Property the business operates from | Can be used, but think about what happens to the business if the property is at risk |
Security can take the form of a first mortgage, a second mortgage behind an existing investment loan, or a caveat.
What about properties held in a trust or company?
Many investment properties are owned by a family trust or a company rather than individuals. That doesn’t rule them out, but it adds steps:
- the trustee (or company) gives the security, not you personally
- lenders review the trust deed or company documents to confirm the trustee can do so
- directors of a corporate trustee are usually asked for guarantees
business.gov.au notes that with a trust, “the trustee is legally responsible for its operations”. Tell us the ownership structure at the start and we’ll match you to lenders comfortable with it.
Is a business loan secured by an investment property a business loan?
Yes, if the money is used for a business purpose. What determines the loan’s nature is how the money is used, not which property secures it. ASIC’s guidance notes that credit to purchase, renovate or improve residential property for investment purposes is a different category altogether. So a loan to renovate the rental is not a business loan; a loan secured by the rental to buy business equipment can be. We only arrange finance for business purposes.
If you’d like to see what your investment property could support, start a quick enquiry with the property’s approximate value and any loan owing.
What’s still at risk?
Using an investment property protects your home from direct security, but it isn’t risk-free:
- The investment property can be sold if the business loan isn’t repaid.
- You may lose its rental income — which might be helping to pay other debts.
- Sole traders and guarantors are still personally liable for the business debt.
- Selling it later means the business loan is repaid from the proceeds first, which can change your plans.
Read protecting the family home for more ways to keep overall risk down.
Illustrative example: A landscaping business owner owns his home with his partner and a small rental unit in his own name. He needs $110,000 for a new excavator and trailer. Rather than involve the family home, he offers a second mortgage over the rental unit, behind its existing investment loan. His partner isn’t asked to sign, and the loan is sized to the equipment quotes with a two-year repayment plan.
How does this compare with other routes?
The borrow personally or through the business tool lays out how security choices change your risk. If you’d rather not use any property, see business loans without using your home.
What if the property is the business’s own premises?
Some owners own the building their business trades from, personally or through a separate entity. Using it as security is common, and lenders often like it because the property and the business are closely linked. The flip side is that if the loan goes wrong, both your premises and your business could be affected at the same time. If the premises are owned by you or a family trust and leased to your business, make sure the lease is documented and the rent is actually paid — lenders will look at that arrangement closely.
What should you have ready?
- the property’s address and a rough value
- any existing loan balance and lender
- who owns it (you, jointly, a trust or a company)
- lease details if tenanted, especially for commercial property
- what the business money is for, with quotes if possible
Put the right property to work
Choosing which property carries the risk is a personal decision, and we’ll talk it through properly. The enquiry takes about 60 seconds and there’s no credit check. It goes to one specialist rather than being blasted to a crowd of lenders, and they’ll call to look at your properties and your plans together. Please be accurate about ownership and existing loans so we can find the right structure the first time.
Frequently asked questions
Can I use a rental property as security for a business loan?
Yes, often. Residential and commercial investment properties can be used as security for property-secured business loans.
What if the investment property already has a loan on it?
A second mortgage or caveat may be possible behind the existing loan, depending on the equity and the first lender's terms.
What if the property is held in a trust or a company?
It can often still be used, but the trustee or company will need to give the security, and lenders will review the trust deed or company documents. Tell us the ownership structure upfront.
Does the tenant need to know?
The tenancy generally continues as normal. Lenders will want to know about the lease, particularly for commercial property.
Is this safer than using my home?
It keeps your own home out of the loan documents, which many owners prefer. But the investment property is still at risk, and as a sole trader or guarantor you remain personally liable.