Asset Based Lending Australia

The opening question is what the property is worth today and how readily it could be sold. Valuation, location, title, zoning and existing mortgages carry the weight, so a clean title in an active market supports a larger advance than a part-completed build.

Because the asset carries the risk, the loan to value ratio (LVR) is set more conservatively than in bank lending. First mortgage facilities commonly sit around 65% to 75% of assessed value, and second mortgage positions lower again. Equity sets your limit, not income.

These are transitional facilities, not 30-year loans, and the term is set to the exit rather than to a repayment schedule. A funder would rather price a short facility that closes on time than a long one that drifts.

Most asset based lending is written for business or investment purposes and sits outside the National Consumer Credit Protection Act 2009. Where a loan is wholly or predominantly for personal or domestic use, consumer credit protections apply. We act as a credit representative under Australian Credit Licence (ACL) 387025 and are accredited with the Mortgage and Finance Association of Australia (MFAA), so both paths are handled under the right framework.

A completed apartment can be valued below the contract price, or lender policy can shift during a long build, leaving a gap on a date that will not move. Asset based funding can cover the shortfall, then be refinanced once the property is tenanted or revalued.

Auction purchases and settlements of 21 to 30 days leave little room for a standard approval. Where the alternative is penalty interest or a forfeited deposit, funding that settles in days decides whether the contract completes.

Equity can be drawn for a deposit, a business opportunity or an urgent liability without putting the asset on the market. Where income evidence supports a conventional facility, a standard home equity loan is usually cheaper.

Interest charged by the Australian Taxation Office (ATO) on an overdue balance accrues daily, and under the ATO interest charge deduction rules, interest incurred from 1 July 2025 is no longer deductible. The ATO may also report business tax debts to credit reporting bureaus where at least $100,000 is more than 90 days overdue and the taxpayer is not engaging with it. Refinancing that balance against property can reduce the cost of carrying it, though your accountant should confirm the tax treatment.

Buying before your existing property settles creates a temporary funding gap that this structure is built for. Our bridging finance brokers can weigh it against a standard bridging facility and price both before you commit.

The funder holds the primary registered security, which supports the largest advance and better pricing than second mortgage or caveat funding. It suits borrowers with an unencumbered property or a small existing debt that can be refinanced into the facility.

The existing bank loan stays in place and the funder registers behind it. Advances are smaller and priced higher, and consent from the first mortgagee is often required, which adds a step to the timeline.

Security is a caveat lodged on title rather than a registered mortgage. These are typically the smallest and shortest facilities, used when days matter and the amount is modest relative to the equity behind it.

Security can be spread across several titles held personally, in a company or through a trust, and combined equity often produces a stronger position than any single asset. Borrowing inside a self-managed super fund (SMSF) follows limited recourse borrowing rules, which confine the lender to the single asset being acquired.

The loan is repaid by a conventional facility once the blocking issue clears, such as returns being lodged, a lease commencing or a build completing. Funders want to see which lender is likely to take it.

A property is sold and the proceeds retire the debt. Evidence of realistic pricing matters, because a valuation supports the advance while an ambitious agent appraisal does not.

Repayment comes from a documented inflow such as a settled contract, a distribution or a business sale. Stronger documentation makes a funder comfortable with a longer term.

Rates sit well above standard mortgage pricing and are set by the LVR, the asset and the term. Interest is often capitalised or prepaid, so compare total cost across the expected term rather than the headline rate.

Expect an establishment fee and the funder's legal costs, usually deducted at settlement rather than paid upfront. Ask for the full schedule in writing before you sign a term sheet.

A current valuation is almost always required and is paid by the borrower. Title searches, mortgage registration and any first mortgagee consent fee sit alongside it.

Check what an extension costs, whether early repayment attracts a minimum interest period and how quickly a discharge is processed. Those clauses decide your flexibility once the exit is in motion.