Can You Use Property Equity to Buy A Business?

Can You Use Property Equity to Buy A Business?

Sometimes. Property you already own can be offered as security to help fund part of a business purchase. How much you can access depends on the lender’s policy, the property’s valuation, your existing debts and how the borrowing is serviced. It also puts that property at risk if the business can’t meet its obligations.

What is the difference between equity and accessible equity?

Equity is what a property is worth minus what you owe on it. Accessible equity is the portion a lender will actually let you borrow against.

Lenders set their own limits on how much of a property’s value they will lend against, and those limits vary by lender and by loan purpose. A property with a lot of equity on paper can therefore release less cash than the raw figure suggests. When the cash contribution decides whether a deal works, that gap matters.

Why does the purpose of the loan matter?

Because the rules that apply depend on what the money is for.

In Australia, the National Credit Code generally covers credit provided wholly or predominantly for personal, domestic or household purposes, and credit to buy, renovate or improve residential property for investment. Credit provided wholly or predominantly for a business purpose generally falls outside it, even if a home is offered as security. Who the borrower is also matters, because the Code is aimed at individuals and strata corporations rather than companies. A signed business purpose declaration doesn’t settle the question by itself, since the actual purpose of the loan is what counts.

In practice, some protections that come with regulated home loans may not apply to a business-purpose loan secured by your home. Other protections may. For example, unfair contract terms laws can apply to some standard-form loan contracts with small businesses, subject to eligibility tests. Ask your solicitor which protections apply to the specific facility.

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Do lenders treat business-purpose equity differently?

Policies differ between lenders and between loan purposes. In the client story we’ve published, a major lender’s business-purpose policy could consider access to a larger portion of the residential equity than a standard residential cash-out had released. That was subject to valuation, credit approval, pricing and risk assessment.

That was one lender’s policy applied to one set of circumstances. It shouldn’t be read as something every lender offers, and it wasn’t a standard home loan.

What are the risks of using property as security?

• The property sits behind the debt. If the business can’t meet its obligations, the property offered as security can be exposed.

• Higher borrowing can mean higher repayments and more risk. Releasing more equity increases what you owe.

• Valuation can change the result. The amount available depends on the valuation, which may differ from your expectations.

• The business may not perform as you expect. Seller figures and your own forecasts are not guarantees.

Using equity moves part of the business risk onto personal property. That is a decision for you, your accountant and your solicitor as well as your lender.

What do lenders look at?

Based on the case above, we reviewed the properties owned, existing debts, the business purpose of the funds, the proposed commercial security and how the lending would service. Lenders will also look at the financials of the business being bought.

Frequently asked questions

Is equity release the same as a top-up?
Not necessarily. A top-up increases an existing loan, while accessing equity can also involve refinancing or a separate facility. The right route depends on your lender and your structure.

Can more than one property be used as security?
Sometimes. Each additional property is assessed as part of the overall structure and adds to your exposure.

Can equity fund my contribution to a business purchase?
It can in some cases, depending on the lender’s policy. Confirm this before you sign an unconditional contract.

Does using equity affect future borrowing?
Higher debt generally reduces how much you can borrow later, so consider your longer-term plans first.

Book a 15 minute commercial and business finance strategy call or complete the Finance Square free 2-minute quiz to look at how much of your equity is realistically accessible, and whether using it suits your situation.

Priya Dey is the founder of Finance Square Group, a Melbourne-based finance broking firm specialising in self-employed borrowers, investors and business owners.

This article is general information only and does not take your objectives, financial situation or needs into account. It is not a recommendation that any product or lender is suitable for you, and it is not legal or tax advice. Lending policies and laws referenced on this page are current as at October 2026 and are subject to change without notice. Every application is assessed case by case and approval is not guaranteed.

Finance Square Group is a trading name of Sioux Property Solutions Group Pty Ltd, Credit Representative 543438, authorised under BLSSA Pty Ltd, Australian Credit Licence 391237.