If you own your home and run an established business, a lender may offer to fund your next ute or van against the house rather than against the vehicle. The rate can look lower. The real comparison is the rate, the repayment term and what is at risk if the business has a bad year.
This article is for business owners planning a vehicle or equipment purchase who are weighing a home-secured loan against asset finance such as a chattel mortgage. It uses the Reserve Bank's latest business lending rate figures and a worked example. The sources linked below were checked on 15 November 2026.
What the RBA figures show about home-secured business loans
The RBA's business lending rates table (F7), published on 6 November 2026, reports average rates on new loans to small businesses funded in September 2026:
- All new small business loans: 7.38% a year.
- New small business loans secured by residential property: 7.05% a year.
- New variable-rate small business loans: 7.14%, and fixed-rate: 7.98%.
So on average, new small business loans secured against a home were 0.33 of a percentage point cheaper than all new small business loans that month. The RBA's lenders' interest rates page shows the same 7.38% small business figure for new loans and notes that it includes both variable and fixed loans. They are averages across many loan types and borrowers, not a quote for a vehicle loan, and they do not tell you what asset finance on a particular ute costs.
The September figures also came before most of the recent rises. The RBA lifted the cash rate to 4.60% on 29 September and to 4.85% on 3 November, so new loans written now may be priced higher.
Worked example: rate versus term on a $70,000 ute
Our own calculation, for illustration only. It assumes $70,000 is borrowed, monthly repayments, no fees and a rate that stays the same for the whole term. Your rate, fees and term will differ.
- Home-secured at 7.05% over 5 years: about $1,387.74 a month and $13,264.15 in total interest.
- At 7.38% over 5 years: about $1,398.67 a month and $13,920.09 in interest. The 0.33 point gap is worth about $656 over five years on this amount.
- Home-secured at 7.05% but repaid over 25 years alongside the mortgage: about $496.98 a month, but $79,094.13 in interest. That is roughly $65,830 more than repaying the same amount over five years at the same rate.
- Home-secured at 9.05% over 5 years (2 points higher): about $1,454.78 a month, or $67 more each month.
The rate gap on this example is small next to the effect of the term. A vehicle you expect to replace in five to seven years can still be costing you interest decades later if the amount is simply added to a 25-year home loan. Moneysmart makes the same point about refinancing debts: a lower rate over a longer term can increase the total cost.
What is at risk under each structure
Under a chattel mortgage, the vehicle being bought is generally the security for the loan. Our guide to chattel mortgages explains how that works and how GST is treated. With a home-secured loan, the house is the security. Moneysmart warns that if you use your home as security and cannot keep up repayments, the lender can sell it to recover the money, and suggests considering all other options first. Its guidance on borrowing against your home also suggests checking whether you could still afford repayments if rates rose by 2 or 4 percentage points.
For a business owner, that means a downturn in the business can put the family home in play for a vehicle debt. Asset finance for a company can also involve a director's personal guarantee, so it is not risk free either. Our guide to personal guarantees in business finance lists the questions to ask about what you sign.
The tax question to settle before you draw down
Whether interest is deductible generally depends on what the borrowed money is used for, not on what secures the loan. The ATO's ruling TR 95/25 says the character of interest is generally worked out from the objective circumstances of the use to which the borrowed funds are put, while taking all the circumstances into account.
In practice, mixing business and private money in one home loan account can make that use harder to show. Ask your accountant how the funds should be drawn and recorded, whether the vehicle should be owned by you or your business, and how GST credits and depreciation apply, before the money is drawn. This article does not assess your tax position.
Checklist before you choose
- Get both quotes on the same amount and term. Ask for the rate, comparison rate where provided, all fees and the total repayable over, say, five years for each option.
- Match the term to the vehicle. If you use home equity, ask whether it can be a separate split or loan that is repaid over the vehicle's working life rather than the mortgage's remaining term.
- Count the setup costs. Moneysmart notes that secured loans may involve valuation, legal and other fees.
- Check the security and guarantees. Write down what each lender can claim if repayments stop: the vehicle, the house or you personally.
- Test a higher rate. Rework the repayment at 2 points higher and check it fits the business's cash flow.
- Keep the records clean. Agree with your accountant how the loan, the vehicle's ownership and the business use will be documented.
Our comparison of asset finance and business loans covers matching each facility to its purpose. If you are trading in a financed vehicle, see upgrading a work vehicle with positive equity. Homeowners buying a private car can read about using a mortgage redraw or offset to buy a car.
The bottom line
In September 2026, new small business loans secured by a home averaged 7.05%, against 7.38% for all new small business loans. On a $70,000 ute over five years that gap is worth about $656, while stretching the same amount over 25 years adds about $65,830 in interest and puts the house behind a vehicle debt. Compare complete written offers on the same term before deciding. When you are ready, explore business equipment finance or test repayments with our calculators.
The rates above are the RBA's published averages and our calculations are labelled with their assumptions. This article is general information only and is not financial, tax or legal advice.
