Types of Security Home Loan Lenders Require

The types of security a home loan lender requires start with a registered first mortgage over residential property that the lender can value and sell. Some loans add supporting security, such as a family member’s limited guarantee or a term deposit that a specific product accepts. The lender, the loan product and the property itself decide which security is enough.

Value alone doesn’t settle it. Title type, location, access and the time a property would take to sell can lower the maximum loan-to-value ratio (LVR) or rule the property out.

Identify the Primary Security

The primary security is the residential property the lender takes a mortgage over, usually the home being bought or refinanced. The lender registers a first mortgage on the title, so its claim ranks ahead of any later lender if the property is sold. The security address in a loan application is this property’s address, which can differ from where your client lives.

Before it accepts the property, the lender checks five things.

• Ownership: the title search shows who holds the land, and every registered owner signs the mortgage.
• Tenure: the land is held under a title the lender accepts, such as freehold Torrens title or strata title.
• First mortgage: any existing mortgage is discharged at settlement, so the new lender ranks first.
• Value: a valuer reports the property’s market value and the comparable sales behind it.
• Saleability: the valuer reports how readily the property would sell.

Helia, an Australian lenders mortgage insurance (LMI) insurer, sets out a typical version of these checks in its 10 August 2026 underwriting guidelines. Its minimum requirements include residential zoning, connected power and water, direct all-weather road access and at least 30 square metres of living area. The valuation must be less than 90 days old and cite at least three recent settled sales of similar properties.

Saleability matters because selling the property is the lender’s way out if the loan isn’t repaid. Helia’s guidelines exclude properties needing substantial repair, landlocked lots and properties whose selling period runs past agreed limits. A property can value well and still fail on saleability.

For a purchase, Helia’s guidelines calculate LVR on the lower of the purchase price and the valuation, while a refinance uses the valuation. Its standard LMI covers up to 95% LVR on a residential dwelling. Each lender then sets its own maximum for the product and property.

The maximum LVR guide compares those limits, and the bank property valuation guide explains how lenders order valuations.

Replacing the security on an existing loan is a separate process, covered in the security swap guide.

Separate Security From a Guarantee

Security is an asset the lender can sell, while a guarantee is a person’s promise to repay part or all of someone else’s loan. A security guarantee backs that promise with a mortgage over the guarantor’s own property. The borrower’s property still secures the whole loan, and the guarantee adds a second, limited layer behind it.

Moneysmart’s guarantor guide, updated 9 September 2026, says a guarantee can be limited to a set amount, such as an amount that covers part of the deposit. If the borrower defaults and the guarantor can’t pay, the lender may sell the guarantor’s home. Moneysmart recommends independent legal advice before signing.

Westpac’s Family Security Guarantee, as at October 2026, requires that advice. The guarantor nominates the amount they’re liable for, and a single guarantee can’t exceed 50% of the guarantor’s security.

A Fictional Limited Guarantee

In this fictional example, Mia is buying a $600,000 home to live in. She has $30,000 for the deposit, plus her purchase costs, so she needs a $570,000 loan at 95% LVR. Her father, Sam, owns an $800,000 home with no mortgage and agrees to a limited guarantee.

Party	Role	Security given	Most they can lose
Mia	Borrower and owner of the new home	First mortgage over the $600,000 home	The home, and she owes the whole $570,000 loan
Sam	Guarantor	Mortgage over his $800,000 home, limited to $90,000	Up to $90,000 under the guarantee
Lender	Lends $570,000	Holds both mortgages	Relies on the guarantee for the $90,000 above 80% of the price

This lender sizes the guarantee so Mia’s home secures 80% of the price, or $480,000, and Sam’s guarantee covers the remaining $90,000. Westpac’s customer guide uses a different method: it divides the loan by the property value plus the guarantee amount. On that method, Mia’s LVR would be 82.6%, and she’d need a guarantee of more than $112,500 to get under 80%.

Sam’s $90,000 is about 11% of his home’s value, well inside Westpac’s 50% cap. Once Mia’s loan falls to a level the lender accepts without the guarantee, she can ask to release Sam’s mortgage, as the guarantor removal guide explains. The guarantor requirements guide covers who can act as guarantor.

This example shows the parties and amounts, not the legal effect of any document. Sam’s guarantee and mortgage decide his actual liability, so he gets his own legal advice before signing. Check too whether his mortgage secures only the guarantee, because the cross-collateralisation guide shows what happens when one mortgage secures several loans.

Check Alternative Assets

Shares, term deposits and cash count as home loan security only where a named lender product accepts them. They don’t replace the property mortgage on a standard home loan, and each product sets who holds the asset and when it’s released.

Westpac’s Family Security Guarantee is one documented case of a term deposit as security for a home loan. Its product page and customer guide, as at October 2026, let the guarantor use a Westpac Term Deposit instead of home equity. The deposit is locked against the loan at settlement and rolls over until the LVR target is reached and the guarantee is released.

That term deposit belongs to the guarantor. A borrower’s own term deposit usually becomes deposit money instead, and Helia’s 10 August 2026 guidelines list bank accounts, including term deposits, as acceptable deposit sources. Count it only if it matures, or can be broken, before settlement.

Shares and Crypto

Can you use shares as security for a home loan? Only where the lender’s written product policy names shares as accepted security. Shares more often help by being sold, and Helia’s guidelines list shares as an acceptable deposit source.

Shares are the security on a margin loan, which Moneysmart describes as a loan to invest in shares or managed funds. Margin calls can follow if the investment’s value falls. A margin loan is a separate product with its own lender and terms.

Crypto isn’t land, so it can’t be the registered mortgage behind a residential home loan. Helia’s deposit-source list names shares and asset sales but not crypto. Count crypto as deposit money only once it’s sold, the proceeds sit in your client’s account and the lender’s policy accepts that source.

Evidence to Hold Before You Rely on It

Before you describe cash, a term deposit or shares as supporting security, hold this evidence from the lender.

1. The lender and the exact product, such as Westpac’s Family Security Guarantee.
2. The product guide, credit policy or written approval that names the asset as accepted security.
3. The asset’s owner, and who signs the security documents.
4. How much of the asset’s value counts, plus any minimum loan size or excluded loan types. Westpac’s guide sets a $150,000 minimum loan and excludes line of credit and bridging loans.
5. When the lender locks the asset, and the condition that releases it.

Land as Collateral

Land can secure a home loan, but the lender assesses it under separate land rules. Helia’s guidelines accept vacant land up to 2.2 hectares at 95% LVR under standard LMI, relying on the land value only. The vacant land loan guide covers that assessment.

Rural and rural residential properties follow separate policy, set out in the rural property home loan guide. Some locations carry their own caps, such as Helia’s 90% limit in listed single-industry postcodes. The postcode restrictions guide explains how lenders apply those lists.

Record Security Risks

Record each property fact that can change acceptance or the maximum LVR before you shortlist lenders. Take them from the contract, title search, valuation and any inspection report.

These examples come from Helia’s 10 August 2026 guidelines. Other lenders and insurers keep their own lists.

Fact to record	Why it matters	Helia example
Zoning and use	Non-residential property is usually outside home loan policy	Commercial, industrial and retail properties are unacceptable, except home units in a commercially zoned development
Location	Some areas carry a lower LVR cap or are excluded	90% cap in listed single-industry postcodes; islands without a sealed road connection are unacceptable
Title type	Some titles can’t be accepted	Purple title (WA), moiety title (SA), company share title (VIC), stratum title (VIC) and limited title are unacceptable
Access and services	The lender needs a property it can reach and sell	Direct all-weather road access and connected power and water are required; landlocked lots are unacceptable
Land size	Larger sites move to rural or specialist policy	Improved sites larger than 50 hectares are unacceptable
Existing encumbrances	Covenants and site risks limit use or sale	“Lease of life” covenants, a floor below the known flood height and a boundary within 50 metres of high voltage lines are unacceptable
Floor area	Small dwellings can be hard to sell	A strata unit under 30 square metres is unacceptable

Apartments add building-specific checks, such as internal floor area and density. The apartment loan guide covers that assessment.

Disputed Valuation

When your client disputes a valuation, first decide whether the valuer got a fact wrong or reached a judgement you disagree with. A factual error can be checked, such as the wrong land size, bedroom count or a missed renovation. Disagreement about comparable sales is a judgement, so it needs stronger sales evidence.

1. Check the report’s facts against the title, floor plan, building approvals and renovation invoices.
2. For comparable sales, gather recent settled sales of similar nearby properties. List each sale’s address, date and price. Say why it’s closer than the valuer’s choice.
3. Lodge that evidence through the lender’s reconsideration process, and record the date it expects to respond.
4. Track that date against the contract’s finance date. Under Helia’s guidelines, the valuation also has to be less than 90 days old when Helia issues its LMI acceptance.
5. If the value stays the same, rework the structure. The options are a larger deposit, LMI at a higher LVR, a guarantee or a lender whose valuation and LVR limit fit.

Leasehold Land, Crown Leases and Community Leases

A mortgage of lease is a mortgage over a lessee’s registered leasehold interest in land, not over freehold title. The lender’s security lasts only as long as the lease and depends on its permitted use. Lenders therefore treat most leasehold land more cautiously than freehold.

Helia’s guidelines accept Crown leasehold in the ACT. They treat Crown land elsewhere, other leasehold land, land under a licence to occupy and properties under the NSW Western Lands Act as unacceptable. Above 80% LVR at a lender that insures through Helia, leasehold outside the ACT can’t get LMI cover.

For community leases, the Office of Township Leasing, as at October 2026, says a Home Ownership Sublease under a Northern Territory township lease comes as close as possible to freehold. That lets Indigenous Business Australia or a bank lend to eligible residents. Indigenous Business Australia can help when a loan from a mainstream lender is hard to get.

Before you offer leased land as security, check these points.

1. The lease type, and that your client is the registered lessee.
2. The remaining lease term against the loan term.
3. The permitted use, which needs to include residential use.
4. Whether the lease allows a mortgage, and whether the lessor must consent.
5. The rent and any lease conditions that could end the lease.
6. Which lenders and LMI insurers accept that tenure at the LVR your client needs.

Once each fact is recorded, shortlist only lenders whose policy accepts that title, location and LVR. Bulma’s Policy Advisor answers security and LVR questions across 52+ lenders and quotes the policy wording behind each answer, which you can keep in your file notes.