The security spectrum
Metropolitan residential and standard commercial or industrial property sits at the strong end: deep buyer pools, plentiful comparable sales, quick sale timeframes and the highest available LVRs. Retail, larger commercial holdings and regional assets sit in the middle, with LVRs stepping down as the buyer pool narrows.
Vacant land, rural and agricultural holdings, and specialised assets — service stations, childcare centres, pubs, aged care, marinas — sit at the cautious end. They can absolutely be funded, but at lower LVRs and higher pricing, because a forced sale takes longer and prices are less predictable.
What lenders check on the security itself
Title and ownership, existing mortgages, caveats and encumbrances, zoning and planning constraints, easements and covenants, current leases and rental income, building condition and compliance, and environmental factors such as contamination, flood and bushfire exposure.
Statutory charges matter too: unpaid council rates, land tax and owners corporation levies can rank ahead of a mortgage, so they are verified before settlement.
Multiple securities and cross-collateralisation
Where one property does not provide enough coverage, a second or third property can be added so the lender assesses the combined LVR across the portfolio. This can unlock a larger facility or better pricing.
The trade-off is that all pledged properties become exposed to the one facility, and releasing any of them requires the lender's consent. Only cross-collateralise deliberately, and understand what has to happen before each property can be released.
Key points
- Liquidity of the asset drives LVR, price and turnaround.
- Metropolitan residential and standard commercial price best.
- Land, rural and specialised assets attract lower LVRs.
- Additional security can lift leverage, but exposes more assets.
Frequently asked questions
Can I use a property I do not own?
Yes, if the registered owner agrees to be a guarantor and grant security. They should obtain independent legal advice.
Can rural property secure a private loan?
Yes, at more conservative LVRs reflecting longer selling periods and thinner comparable evidence.
Is vacant land acceptable security?
Often yes, particularly with development approval, but at lower LVRs because it produces no income.