Your business has found premises to buy, but the deposit would use most of its cash. Offering equity in your home may look like a way to make the purchase easier.
It also connects the commercial decision to the place your household lives. The question is bigger than whether the lender will accept the home. You need to know what debt it secures, what happens if the business struggles and what it would take to sell or refinance the home later.
Ask for the security structure before judging the rate. A lower quoted cost can be attractive, but only when you understand the assets and future choices being committed.
Equity is not income
A home can provide security without providing cash to meet repayments. If the business cannot comfortably carry the new commitments, adding another property to the security package does not resolve that cash-flow problem.
Separate the purchase budget from the repayment budget. Include the commercial deposit, purchase costs, any works and money needed to keep trading. Then show how the business and household would meet their ongoing obligations.
Our buy-or-lease guide helps compare the operational consequences. The commercial purchase checklist helps identify the cash needed beyond the price.
Request two proposals
One proposal can investigate borrowing supported by the home. The other should test a commercial property facility without the home as additional security, if available. Ask both to identify the borrower, every secured asset, guarantees and the cash contribution.
NAB Business Options Loan is a named route to investigate for business borrowing with different security arrangements. NAB says businesses typically provide residential or commercial real estate as security. Pricing depends on the applicant's circumstances, and fees are supplied on application.
That makes a written proposal essential. Ask whether the proposed purchase purpose and security arrangement qualify, the complete cost and what other facilities the security documents cover. The public product page is not evidence that NAB will finance your purchase against your home on a particular term.
For a property-focused comparison, Brighten Commercial Full Doc lists owner-occupied and investment purposes and commercial property types including offices, warehouses and shops. It is worth asking whether a proposal can be assessed using the commercial property without additional home security. Its public description does not promise that structure or remove guarantees. Have the proposed security package confirmed explicitly.
Compare the two actual offers, rather than assuming one lender always needs the home and another never does. A separate property loan may require more cash or different pricing. Putting the home into the structure may preserve cash while increasing what is exposed if repayments fail.
Read the security and guarantees together
Security and a guarantee are related but different commitments. A mortgage gives the lender rights over the secured property under its terms. A guarantee can create a personal obligation for someone supporting another borrower's debt.
Moneysmart's guarantee guidance warns that a guarantor may have to repay the debt and can lose a home used as security if the borrower defaults and the guarantor cannot pay. Independent legal advice is particularly useful before a household asset supports business borrowing.
Ask your solicitor to explain which obligations the mortgage and guarantee cover, whether their amounts are limited and how they end. Separate loan account numbers do not, on their own, answer those questions. Do not assume that using a home turns a business-purpose facility into an ordinary home loan with identical protections.
Plan how the home gets out
If you may move home, refinance or reduce your involvement in the business, raise that now. Ask the lender what assessment, repayment or replacement security would be needed to release the home. Obtain the answer in the proposal and have the documents checked against it.
Our guide to using home equity for a business covers the broader borrowing decision. For a premises purchase, bring Flexdoc both property details, existing debts, cash available and the business income records. Request the two security proposals before deciding how much household exposure the purchase deserves.