Property equity: the evidence that outweighs missing paperwork

Why does property change everything?

Every lender asks the same final question: if the business can’t repay, how do we get our money back? For an unsecured lender, the only answer is the business’s cash flow, so they need strong evidence of it. For a secured lender, the answer is the property.

That’s why property equity is the single most powerful substitute for missing paperwork. When the lender can rely on the security, a missing tax return or an overdue BAS becomes a detail to explain, not a deal-breaker.

Property-secured business loans run from $20,000 to $5,000,000, against residential or commercial property, using a first mortgage, a second mortgage or a caveat.

How is equity worked out?

Equity is simply the property’s value minus the debt already secured against it.

Step	Illustrative figure
Estimated property value	$1,100,000
Existing home loan	$520,000
Equity	$580,000
Total secured debt the lender might allow (their maximum LVR)	Depends on lender and property
Room for a new loan	Whatever sits between existing debt and that limit

Illustrative figures only. Each lender sets its own maximum loan to value ratio (LVR) depending on the property type, location, loan position and term, and uses its own valuation. So “equity” and “what you can borrow against it” aren’t the same number. A specialist can give you a realistic read once they know the property.

First mortgage, second mortgage or caveat?

• First mortgage. The property is unencumbered, or the new loan refinances the existing one. The new lender is first in line.
• Second mortgage. Your existing lender stays in place and the new business loan sits behind it. Useful when you don’t want to disturb a good home loan.
• Caveat loan. The lender lodges a caveat on title to protect its interest. Often quicker to arrange and commonly used for shorter terms.

Which fits depends on your existing loans, the amount, how long you need the money and how soon you need it. Low doc secured business loans compares them in more detail.

What does a secured lender still need?

Equity reduces the paperwork, but doesn’t remove the need for a sensible loan. Expect questions on:

1. Purpose. What the money is for. Loans are for business purposes only.
2. Exit. How the loan will be repaid: from trading, a property sale, a refinance once your returns are lodged, or a combination.
3. Ownership. Who owns the property and whether they’re all involved. A property owned by someone outside the business needs that person’s agreement.
4. Existing debt. A recent statement for any mortgage on the property.
5. Your situation. Bad credit and ATO debt are considered case by case.

The exit is where many applications are won or lost. “Refinance to a lower-cost lender once the two overdue returns are lodged in about three months” is a plan. “We’ll see how it goes” isn’t.

Illustrative example: equity bridging a paperwork gap

Illustrative only; not a real business.

A builder operating through a company hasn’t lodged returns for two years after a difficult period. He’s catching up with a new tax agent. He needs $300,000 for working capital on two new contracts and to clear a GST debt. His family home has significant equity behind a modest home loan.

An unsecured lender can’t get comfortable without the returns. A secured lender, lending by second mortgage behind the existing home loan, can: the equity covers the loan comfortably, the contracts support the trading story, and the exit is a refinance once the returns are lodged and the company’s position is clear.

What are the trade-offs?

It’s worth being clear-eyed:

• Your property is at risk if the loan isn’t repaid. Only secure what you’re comfortable securing.
• Costs vary. Private and low doc secured lending is priced on the circumstances. We don’t publish rates because every loan is priced individually, and a specialist explains the full cost before you commit.
• Shorter terms are common. Many low doc secured loans are designed as a bridge to a longer-term facility. Plan the exit from day one.

Does commercial property work too?

Yes. Commercial property, including premises your business operates from, can secure a business loan. Lenders may assess commercial security differently from residential, including lease details and property type, which a specialist will explain for your situation.

Which pages should you read next?

If property is your likely route, these explain the details:

• Low doc secured business loans compares first mortgages, second mortgages and caveats in more depth.
• Business loans without tax returns covers how the rest of your evidence fits around the security.
• Overdue tax returns or BAS explains how secured lenders treat catch-up plans.
• The substitute checker shows how your evidence lines up, with property included.

See what your equity could unlock

If you own property and your paperwork is behind, security may be the shortest path to funding. Tell us about the property and what you need. It takes about a minute, there’s no credit check when you first enquire, and your details go to one team rather than a queue of lenders.

A real person will look at the equity, the purpose and the exit, and call you with an honest read. Please give accurate figures for value and existing debt on the form; it saves a lot of back-and-forth. See if you qualify.