If you run your own business, you already know the catch. The year you reinvest hardest, new equipment, new hires, a big contract is the year your tax return looks its weakest. Then you go to borrow against your home, and the bank reads that return literally.
Strong business, strong equity, and still knocked back. It’s one of the most common frustrations self-employed homeowners bring us.
Why lumpy income trips the servicing test
Banks want smooth, provable income. Business owners have the opposite: money reinvested, one-off expenses, timing differences between work done and cash in the door. A single soft financial year can sink an application, even when the business is clearly growing and the pipeline is full.
The equity in your home is real. The servicing test just isn’t built to see past last year’s numbers.
Using equity to back the business without monthly repayments
For equity-rich business owners, a second mortgage through a specialist lender can release funds against the home to fund growth or clear pressure, typically with no monthly repayments and no fixed term.
The loan accrues interest and is repaid later from a refinance once the financials recover, or from business profits.
A recent example. An owner of an electrical contracting business had a home worth around $2.9M with a $1.25M mortgage. The business had won several new commercial maintenance contracts but needed $260K for vehicles, equipment and supplier deposits and was carrying a $140K ATO payment arrangement that was squeezing cashflow.
The bank viewed the income as inconsistent because of reinvestment and one-off costs in the prior year. A business loan was available, but the monthly repayments would have drained working capital at exactly the wrong moment.
A $400K second mortgage against the home released $260K for the vehicles, tools and supplier deposits, and $140K to clear the ATO liability. No monthly payments. The new contracts got funded, the ATO pressure was gone, and the working capital stayed in the business with the loan set to be repaid from future refinance or profits.
Why the ATO piece matters
An unresolved ATO arrangement doesn’t just cost interest — it can quietly block your ability to refinance or borrow elsewhere down the track. Clearing it as part of a broader restructure often does more for your borrowing position than the headline dollars suggest.
The honest trade-off
No monthly repayments is the feature that makes this work for a growing business — but it also means interest accrues and compounds against your equity until the loan’s repaid. It fits a clear plan: fund the growth, let the financials catch up, then refinance into cheaper mainstream lending. It’s a bridge, not a permanent structure.
Where we come in
We understand how self-employed income actually works, not just how it looks on a tax return. We’ll assess whether releasing equity genuinely strengthens the business or just adds cost, model the exit into mainstream lending, and line up the right specialist lender if it stacks up. If a standard self-employed loan can do the job, we’ll point you there first.
Growing the business but boxed in by the bank? Let’s talk — we’ll give you a straight answer on what’s possible.
Written by Jeremy Harper, Director of hfinance. I understand how self-employed income really works not just how it reads on a tax return.
General information only, not personal advice. We’ll assess your specific circumstances before recommending anything.