If you own property in Australia, you may be able to use it as security for a purchase, construction project or business cash flow gap. Many borrowers look no further than their existing mortgage, but other finance structures may be available depending on the property’s value, the loan purpose and the repayment plan.
This guide explains the main options under Australian conditions. It also covers two changes that took effect in 2026: APRA’s limits on high debt-to-income residential lending and tighter rules for borrowing through a self-managed super fund. This is general information, not personal financial advice. Your options will depend on your circumstances, but understanding the basics can help you ask better questions.
Start with the goal and the security
Before comparing lenders, clarify what the money is for and what you are willing to provide as security. Common goals include buying and holding a commercial asset, funding construction, bridging the gap between a purchase and sale, releasing equity for business working capital or buying commercial premises through a super fund.
What lenders look for
Lenders usually begin with the asset, including its type, location, condition and current value. They then consider the borrower, which for investors and developers is often a company or trust with directors acting as guarantors. Another priority is the exit strategy, meaning how the debt will be repaid through a sale, refinance or trading income.
Cash flow also matters, although its importance varies by lender and facility. Banks tend to place greater weight on serviceability and lending policy. Non-bank and private lenders may focus more heavily on the asset and exit strategy, with pricing adjusted for the additional risk.
Your main property-secured finance options
Each finance route suits a different purpose. In general, faster and more flexible funding costs more, while lower-cost facilities tend to require stronger documentation and longer approval periods.
Commercial property loan
A commercial property loan can be used to buy or refinance offices, retail premises, industrial buildings and similar assets. The available loan amount depends on factors such as the property’s value, lease profile and ability to generate enough income to cover repayments. Expect the lender to request a valuation, lease documents and financial records.
Residential property can sometimes secure a facility used for business purposes, an approach covered in commercial lending guides from major banks such as Macquarie. Key risks to assess include upcoming lease expiries, vacancies and reliance on a single tenant.
Development finance
Development finance is commonly structured as senior debt, sometimes with stretched senior or mezzanine funding behind it. Money is released in stages based on construction progress and quantity surveyor reports. Lenders assess the project’s feasibility, expected end value and cost to complete.
Some non-bank lenders consider projects with limited pre-sales, but approval is assessed case by case. Borrowers should allow for cost overruns, construction delays and interest expenses if the project takes longer than planned. Switchboard Finance includes development finance among the property-secured routes it covers, helping borrowers compare the documentation required for project lending with other structures.
Private lending
Private lending is generally short-term, asset-backed and focused on the exit strategy. It may suit a borrower whose timing, structure or documentation falls outside a bank’s policy, such as when a settlement date cannot be extended. The interest rate and fees usually reflect that flexibility.
The repayment plan should be specific and realistic. If you cannot explain the exit in one clear sentence, the proposed facility may not be the right tool.
Caveat-secured short-term finance
ASIC’s Moneysmart describes a caveat as a legal notice recorded on a property title to show that another party claims an interest in the property. A caveat-secured loan may be arranged more quickly in some circumstances, but a caveat provides weaker security than a registered mortgage.
Under section 74H of the NSW Real Property Act, a prior registered mortgagee can still proceed with a power-of-sale dealing despite a later caveat. Requirements differ by jurisdiction and loan agreement, so borrowers should obtain legal advice and confirm that the short loan term matches a credible exit.
Registered second mortgage
If there is enough equity behind the first mortgage, a registered second mortgage may be more suitable. Guides such as property finance explain that a second mortgage is registered security with statutory enforcement rights, while a caveat protects an unregistered equitable interest and is enforced differently.
A second mortgage normally takes longer to arrange because the first mortgagee’s consent is usually required. Review the existing loan agreement early to identify consent restrictions, additional fees or events of default.
SMSF commercial property borrowing
A self-managed super fund can borrow through a limited recourse borrowing arrangement, commonly called an LRBA. Moneysmart reports that about 17.5% of SMSF assets are held in residential and commercial property.
The 2026 Treasury Laws Amendment Act revised section 67A of the Superannuation Industry (Supervision) Act so that real property held under an LRBA must be business real property, effective 10 August 2026. Because SMSF borrowing involves legal, tax and investment rules, obtain advice from appropriately licensed professionals before committing to a purchase.
Costs, risks and rules at a glance
Interest rates and lending rules affect both the cost and availability of finance. At its August 2026 meeting, the RBA kept the cash rate target at 4.35%. APRA’s serviceability buffer for mortgage assessments remained at three percentage points. From 1 February 2026, APRA also limited loans with debt-to-income ratios of six times income or more to 20% of new residential lending for both investors and owner-occupiers.
For SMSFs, transitional provisions allow existing LRBA arrangements and certain refinances or settlements agreed before commencement to continue under the previous rules. Confirm whether those provisions apply before relying on them.
Beyond interest, compare establishment fees, valuation and legal costs, line fees, default rates, early repayment charges and extension fees. A short-term facility can become expensive if a sale or refinance is delayed.
Broker or bank? How to compare offers
Going directly to a bank can work well when your circumstances are straightforward and the bank already understands your income and assets. A broker may add more value when the application involves multiple entities, self-employed income, a tight settlement date or a development project requiring access to several lenders. For a broad overview of the concepts behind these choices, see real estate finance basics.
When offers arrive, compare more than the headline interest rate. Review the security position, all fees and line charges, covenants, consent timelines, valuation basis and the lender’s assessment of your exit. A lower-priced facility is of little use if it cannot settle on time.
Switchboard Finance organises its property finance information by route, including commercial property loans, development finance, private lending, caveat loans and second mortgages. This can help borrowers identify how security and documentation requirements differ before discussing a specific application. Indicative terms remain subject to assessment and do not guarantee approval.
Application checklist
- Identity documents and entity records, including trust deeds and ASIC extracts.
- Recent financial records, such as BAS statements and tax returns, or accepted low-documentation alternatives.
- Leases, rent rolls and outgoings for income-producing assets.
- A current valuation or recent evidence of comparable property sales.
- A title search and details of existing mortgages, caveats or other encumbrances.
- Planning approvals, development application documents and a cost construction program.
- Written evidence supporting the exit, such as a sale contract, refinance indication or cash flow forecast.
- The first mortgagee’s consent status when a second security position is proposed.
Brokers such as Switchboard Finance will generally request much of this information before approaching lenders. Preparing it early can reduce delays, reveal gaps in the proposed structure and give lenders a clearer basis for assessment.
Conclusion
There is no single best property finance option. The right structure depends on the purpose, security, timeline, cost and exit strategy. A long-term hold involving a leased commercial asset calls for a different facility from a purchase that must settle within two weeks.
If you are borrowing through an SMSF, check how the 2026 changes affect your proposed transaction. In every case, define the exit first, prepare the documents and compare the complete facility rather than the interest rate alone. Seek licensed advice where tax, superannuation, legal obligations or credit suitability are involved.
