Quick answer
You can secure a business loan against your home through your existing lender, a second mortgage, a caveat loan or a refinance, and doing so usually means larger amounts and lower cost than unsecured lending. The trade-off is that your home can be sold if the debt isn't repaid. Every registered owner must sign, and a loan for business purposes generally sits outside the consumer credit protections that cover a normal home loan.
Key points
- Run three tests first: a clear purpose, a realistic repayment source and a defined exit
- Every owner on the title has to sign, which makes it a household decision, not just a business one
- A loan that's mainly for business purposes generally isn't covered by the National Credit Code
- Keep the business debt separate from your home loan and cap any guarantee you give
The family home tends to be an owner’s largest store of wealth, and frequently the one asset every lender is glad to accept. That makes it the obvious source of business funding and also the most personal one. This page isn’t about the mechanics of each loan structure; our guide to home equity business loans covers those. It’s about the decision itself, and how to make it with your eyes open.
Three tests before you put your home behind the business
Most owners who regret securing a loan on their home skipped at least one of these.
1. Is the purpose clear and productive? Buying equipment that wins a contract, clearing an ATO debt before it becomes a director penalty, settling on a business purchase. These are specific uses with a visible return. Topping up an account that keeps running dry is not, and borrowing against the house won’t fix whatever is draining it.
2. Where does the repayment come from? Name it on paper: contract profit, an asset sale, or a bank refinance after this year’s accounts are done. A vague answer means the loan is premature.
3. What’s the exit if it goes wrong? If trading falls short, could you sell an asset, refinance or downsize without being forced to? A plan B written in advance is worth more than optimism at signing.
If all three pass, using your home is often the sensible choice. Secured money is usually larger, longer and cheaper in total cost than unsecured lending.
Who has to sign, and why that matters
A lender can only take security over a property with the agreement of every registered owner. If your home is in joint names, your spouse or partner will sign as a mortgagor and often as a guarantor of the business debt, whether or not they ever set foot in it.
That turns a business decision into a household one. Moneysmart’s guidance points out that guarantors may be on the hook for the whole debt and that leaving a guarantee once the borrower stops paying is hard. A co-owner who signs should:
- see the full loan documents, not a summary;
- get independent legal advice, separately from you;
- understand what happens to the home if the business can’t pay.
Lenders insist on this for good reason. A guarantee signed without real understanding is one of the commonest grounds for later disputes.
The protections that change when the loan is for business
A normal home loan is regulated consumer credit. A loan secured on the same home but used predominantly for business generally isn’t. You’ll usually sign a business purpose declaration, and from that point the National Credit Code (with its responsible lending and hardship rules for consumer loans) generally doesn’t apply.
Two points follow from that:
- The declaration has to be true. Don’t sign one for a loan that’s really for personal spending. Lenders are expected to check the purpose rather than rely on the form alone, and misstating it causes problems for everyone.
- Which lender you choose affects which commitments apply. Banks signed up to the industry’s Banking Code of Practice, which in its current form took effect in February 2025, make commitments to small business customers and guarantors, such as giving a guarantor time to consider documents before signing. Non-bank and private lenders generally don’t subscribe to that code. That doesn’t make them unsafe, but it does mean the loan contract itself sets the terms, so read it.
Ways to limit the risk to your home
Keep the business debt in its own loan. Ask for a separate loan account rather than a redraw on your home loan. The tax picture stays tidy and the business balance stays visible.
Avoid cross-collateralisation where you can. If the same lender holds your home loan and the business loan and secures each against everything, untangling them later, to sell or refinance one part, can be difficult. See cross-collateralisation.
Cap the guarantee. Some lenders will accept a guarantee limited to a set dollar amount rather than the whole debt. It’s always worth asking.
Borrow what the purpose needs. A larger limit is tempting when equity is available. The house carries every dollar of it.
Plan the exit before day one. For short-term caveat or second mortgage lending, the refinance or sale that repays it should be in view when you sign.
Bank first, then the alternatives
Your existing home lender is the best starting point if the business fits its criteria: it already knows the property, and a top-up or separate business loan from a bank is usually the cheapest option. Banks will usually want financials and serviceability, and they may take a few weeks.
If the bank says no, or the timing doesn’t work, there are alternatives that keep your home loan untouched:
- A second mortgage registered behind your current lender, for larger amounts over months or years.
- A caveat loan, for short-term, urgent needs where speed matters more than cost.
- A private first mortgage refinance, which pays out the current home loan and replaces it.
Our own lenders HomeSec Business Finance (homesec.com.au) and EquityTap (equitytap.com.au) both lend against residential property for business purposes. The second mortgage calculator shows how much headroom your home may have.
Weighing it up and want a sense of the numbers? Share the property details and your plan for a straight answer.
Example: a plumber choosing between two structures
An illustrative case. A plumbing business in Geelong needs $140k for two vans and a stock buffer for a new builder contract. The owners’ home is worth $900k with $410k owing on the home loan. Their bank offers a top-up but needs updated financials, which are four months away, and wants to cross-secure the business loan with the home loan.
The owners split the need. The vans go on equipment finance, secured by the vans. The $60k stock buffer comes from a 12-month second mortgage ranked behind the bank, held in its own account. Both owners take independent advice before signing. Once the financials are lodged, they plan to refinance the second mortgage with their bank on standalone terms. Total exposure on the home is $60k, not $140k.
A step-by-step plan
- Run the three tests and write the answers down.
- Talk it through with your co-owner before you talk to a lender.
- Get a sense of value and existing debt; work out the combined LVR.
- Check whether part of the need can be funded without the house, such as equipment finance.
- Approach your bank first if time allows.
- Compare non-bank options on total dollar cost and the exit, not just speed.
- Read every document, and make sure each owner gets their own legal advice.
Your home, your decision, our help
Putting the house behind the business is a big step, and the owners who do it well treat it as a plan rather than a reflex. If you’ve done the thinking above and want to know what’s possible, we can show you the realistic options for your property and purpose.
It’s roughly a sixty-second form. Asking us won’t put a mark on your credit report. We look at your enquiry ourselves instead of sending it to a crowd of lenders who all want to call you. Someone here weighs up the house, the plan and the way out, and then phones you. Put down an accurate balance owing on the home: real equity numbers are how we land on a workable structure without a second go.
Frequently asked questions
Can I use my home as security if my partner is a co-owner?
Only if your partner agrees and signs. A lender can't take a mortgage or caveat over a jointly owned home with one owner's consent. Your partner will usually sign as a mortgagor or guarantor and should get independent legal advice before doing so.
Do consumer credit protections apply to a business loan secured on my home?
Generally not, if the loan is predominantly for business purposes. You'll usually be asked to sign a business purpose declaration, and the loan then falls outside the National Credit Code. Banks that subscribe to the Banking Code of Practice still give their small business customers and guarantors certain commitments.
Can I borrow against my home if I still have a mortgage?
Yes. A second mortgage or caveat loan sits behind your existing home loan, or your current lender may offer a top-up. The amount depends on the combined loan-to-value ratio across all the debts secured on the property.
How much can I borrow against my home for business?
It depends on the property's value, what you owe on it and the lender's maximum combined LVR, plus your ability to repay. Property-secured business loans typically range from $20k to $5m. A short-term lender relying mainly on equity will usually cap the total lower than a bank.
Is the interest tax deductible if the money is for my business?
Interest on money borrowed and used to earn business income is generally deductible, even when the security is your home. What counts is how the funds are used, so keep the business borrowing in a separate loan account. Confirm the treatment with your accountant.