Commercial finance

Can I use home equity for a commercial property deposit?

Home equity can support the contribution, but the commercial loan and household exposure still require full assessment.

Short answer

Yes. A business owner or investor may be able to release usable home equity to fund a commercial-property deposit and purchase costs. The home-secured borrowing and commercial loan are both debts, so the lender assesses the combined repayments, purpose, ownership structure, property, business or lease income and available security.

Keep the two facilities clear

A separate home-loan split may fund the deposit, while the commercial facility is secured by the purchased premises. This can be cleaner than securing every loan across both properties, but the appropriate structure depends on lender policy, borrower entity, tax advice and available servicing.

Calculate usable equity from the lender's home valuation.
Allow for commercial duty, GST and professional costs.
Map the borrower, owner and funds flow.
Test repayments if business or rental income falls.

The commercial deposit is not the only cash need

Valuation, legal work, building and environmental reports, lender fees and a working-capital reserve can be required. GST timing may materially affect funds to complete. Obtain accounting and legal advice before signing the contract.

An example structure

Assume eligible commercial premises cost $1 million and the commercial lender allows a 70% LVR. The commercial loan could be $700,000, leaving a $300,000 deposit plus costs. If the home has sufficient usable equity and the household can service the additional borrowing, a separate home-secured split may fund that contribution. The total new debt is still about $1 million plus borrowed costs, so analyse the combined position rather than only the commercial LVR.

Owner-occupied and investment servicing

For owner-occupied premises, business cash flow generally supports both the commercial loan and any home-equity split. The lender reviews historical earnings, liabilities, forecasts and the benefit of owning the premises. For an investment, lease income, tenant quality and lease terms can be central. Home equity reduces the cash deposit problem, but it does not turn a weak repayment case into a strong one or remove commercial-property risk.

Protect flexibility and the home

Cross-securing the home and commercial property may improve a lender's security position but can complicate a future sale, refinance or release. Ask whether separate securities are available and what each option costs. Keep the equity funds in a dedicated split and document transfers. Stress-test vacancy, business downturn and rate increases. The family home is exposed to the commercial objective, so the proposal needs a clear return, repayment plan and exit strategy.

Questions to ask before you proceed

What maximum LVR and valuation method apply to this particular commercial property?
Will servicing rely on business cash flow, lease income or a combination of both?
What loan term, amortisation, review conditions, guarantees and security documents are required?

Key takeaway

Home equity can fund the contribution, but the commercial property must still stand up as a security and repayment proposition.

Official guidance: ANZ: Using the equity in your home

This is general information, not personal financial, tax or legal advice. Lending criteria, fees and eligibility vary.

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