What Assets Can I Use as Security?
Australian lenders accept residential property, commercial real estate, vehicles, equipment, and business assets like invoices or inventory as security.
What security do lenders accept?
Australian business lenders commonly accept real estate as primary security. Residential property offers the highest Loan-to-Value Ratio (LVR), often up to 80% without incurring Lenders Mortgage Insurance (LMI), while commercial property is typically capped around 65% to 70%. Using property generally secures the lowest interest rates and longest repayment terms.
For asset finance, lenders accept the specific item being purchased as security. This includes commercial vehicles, trucks, yellow goods, and specialised business machinery. The asset's age, resale value, and market demand dictate the maximum funding amount and potential balloon payment options available to your business.
Lenders also accept general business assets, including outstanding invoices via debtor finance, inventory, term deposits, or a General Security Agreement (GSA) registered on the PPSR. These flexible working capital solutions suit ABN holders needing finance without tying up real estate collateral.
Choosing the right security structure impacts your serviceability, borrowing capacity, and asset protection strategy. A Lonix broker can compare products across diverse Australian lenders to help you properly structure your loan and secure competitive terms.
Related questions
- Can I use personal property to secure a business loan?
- Yes, Australian sole traders and company directors frequently use residential equity to secure business loans, which usually yields lower interest rates and longer terms.
- Do lenders accept unencumbered equipment as security?
- Yes, if your business owns machinery or vehicles outright, lenders can use them as security for equity release to boost working capital.
- What is a General Security Agreement (GSA)?
- A GSA provides a lender with a legal charge over your business's personal property registered on the PPSR, allowing you to secure funding without real estate.
- How does LVR affect the amount of security required?
- The Loan-to-Value Ratio determines what percentage of an asset's market value a lender will advance, dictating whether additional collateral is needed.