Accommodation Deposit and LVR by Asset Type and Location
Accommodation Finance
Accommodation deposit · Valuation basis · Asset type · Location
Nobody publishes these numbers. Not the regulator, not the valuers, and not any industry body. What follows is what the percentage is actually applied to, why accommodation sits below standard commercial security, how location moves it, what the cash at settlement really consists of, and what we see on the files we place.
Quick Answer
No Australian regulator sets an accommodation LVR and no Australian authority publishes one. What a lender advances is set by the asset type, whether you are buying the property and the business together or one without the other, and where it sits.
The percentage matters less than the value it is applied to. Ask which valuation basis the lender will accept, and what security value it will accept on that basis, before you sign the contract. That single question moves the cash you need at settlement more than any percentage does.
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| Where you are right now | The question you are actually asking | Go straight to |
|---|---|---|
| Browsing listings, no asset chosen yet | Can I afford to be in this market at all, and what should I plan for | Work out the real deposit |
| About to sign a contract | Which valuation basis will the lender accept, and is my finance clause long enough | Before you sign |
| Under contract and the valuation came back low | What are my options, in what order, and how long have I got | When the number comes back lower |
| Funding the deposit from the family home | How do I line up two settlements that will not line up on their own | Two settlements, one deposit |
| You already own it, refinancing or interest only expiring | What will they recut me at, and what happens if the value has moved | Refinance and expiry |
| A lender has already said no | Is it the asset, the file, or just this lender | When the number comes back lower |
How much will an Australian lender advance against an accommodation property?
Three variables set it, and you can identify all three before you speak to anyone. The first is the asset type, because a pub with gaming entitlements, a motel, a holiday park and a letting business are four different security propositions. The second is tenure: whether you are buying the property and the trading business together, the property without the trade, or the business without the real estate. The third is location, which decides how deep the resale market is underneath the security.
Now the part every other page on this topic leaves out. No Australian regulator sets a maximum advance or a minimum deposit for an accommodation asset class, and no Australian authority publishes one. We went looking properly, twice. Eleven live Australian search result pages, and four retrieval providers run against a question that named the prudential regulator, the corporate regulator, the central bank, the banking industry association, the property and valuation institutes and the statistical agency by name. Every Australian loan to valuation source that came back was residential mortgage material. Prudential guidance on residential mortgage lending, central bank papers on housing lending policy measures, a general encyclopedia entry, and forum threads about apartment lending. Nothing on accommodation, hospitality or specialised commercial security, from any of them.
Individual lenders do publish maxima on their own product pages, and those are real, but they are that lender's policy on that product on that day rather than a market position you can plan against. So when you read a confident band presented as though it applied generally, you are reading somebody's observation. What we can honestly give you is our own observation, labelled as such, and the structural reasons the numbers land where they do.
One trap follows from that, and it is easy to fall into. The prudential material that dominates any search for Australian loan to valuation guidance is written for residential mortgage lending. It is real guidance and it is not the guidance that governs your motel. The instruments that bear on a specialised commercial security are the credit risk standard and the standardised credit risk practice guide, covered further down, and neither publishes a maximum. If a page quotes residential mortgage guidance at you in an accommodation context, it has reached for the wrong document.
Throughout this guide, loan to valuation ratio means what the regulator says it means, the loan outstanding measured against the value of the property securing it, and nothing more. The interesting question is never the percentage. It is what the percentage is applied to.
Also called: loan to valuation ratio, LVR, LTV, equity contribution.
Can you pay mortgage insurance and borrow more, like on a house?
No, and this is the assumption most people bring with them from buying a home. In residential lending there is a well known trade: go above the standard threshold, pay lenders mortgage insurance, and the lender will advance more. That trade is a feature of the residential market and its insurers, and it does not carry across to a specialised commercial trading asset.
On an accommodation purchase there is generally no equivalent product to buy your way past the ceiling with. That changes what you are actually negotiating. In residential lending a shortfall is often a pricing problem you can pay to solve. Here it is a security problem, and the levers are different ones: the valuation basis, what sits inside the security, the tenure, supporting security offered knowingly, or a layer above the first mortgage. Do not spend two weeks looking for an insurance product that closes the gap.
The table below is the one nobody has built: every accommodation asset type against every tenure, in one place. If you are new to how tenure works on these assets, read freehold going concern against leasehold first, and for the wider lane there is our accommodation and hospitality finance overview.
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| Asset type | Freehold going concern | Freehold, property only | Leasehold or business only |
|---|---|---|---|
| Pub or hotel with gaming entitlements | Entitlement value sits inside the going concern | Bricks only, entitlements excluded | Tightest of the three |
| Pub or hotel without gaming | Trading history plus freehold, no entitlement layer | Closest to a conventional commercial building | Lease term and trading record carry the file |
| Motel | The most commonly funded shape, driven by occupancy and room rates | Purpose-built bricks with limited alternative use | Assessed as a business, lease term is the constraint |
| Caravan or holiday park | Land, improvements and trade, subject to the chattel question | Land-led, permanents against short-stay is the live question | Rarely offered, case by case |
| Serviced apartment | Turns on whether the letting arrangement travels with the sale | A strata lot on its own merits, letting pool outside the security | Tighter again, a scheme interest not real property |
| Student accommodation | Specialised commercial security, never housing | Alternative use is the deciding question | Assessed on the operating agreement, not the building |
| Boarding or rooming house | Registration and compliance assessed ahead of the building | Building and permitted use, not room income | Least commonly funded shape on this table |
| Management rights | Not the usual shape, lot and agreements assessed separately | The manager's lot as security in its own right | The core case, remaining agreement term binds |
From our broking, indicative, as at September 2026
Basis. What follows is drawn from accommodation acquisition and refinance files Switchboard has placed with non-bank and specialist commercial funders, observed over recent years and current as at September 2026. It is directional, not a schedule. Nick has not released numeric advance or deposit bands for publication, so none appear here and none appear in the table above. A blank is better than a borrowed number.
What actually gets accommodation files declined, roughly in order of how often we see it.
- Trading records that do not reconcile. The profit and loss, the activity statements and the bank statements tell three different stories, and the file stops there regardless of the asset.
- A tenure the buyer cannot describe. The contract is written on one basis and the budget assumes another, which surfaces at valuation rather than at enquiry.
- An agreement or lease with less term remaining than the loan needs, which is a document problem rather than a pricing problem and cannot be solved by a larger deposit.
- A location with no comparable sales and no plausible alternative use, where the credit question quietly becomes who buys this if it stops trading.
- An incoming operator with no experience in the asset class and no experienced manager in place, on an asset whose value is inseparable from how it is run.
Timing, directionally. Clean freehold files with complete trading records move fastest. A going concern valuation adds time compared with a bricks assessment, because the valuer is assessing an operating business as well as a building, and specialised assets in thin markets add more again while comparable evidence is assembled. We do not publish day counts, because the variance between a complete file and an incomplete one is larger than the variance between lenders.
What operator experience is worth. It carries real weight on trading assets where the earnings depend on how the place is run, and much less on a passive freehold let to a third-party operator. It does not substitute for records, and no amount of it repairs a short agreement term.
Indicative only, drawn from deals we have placed, as at September 2026. No regulator and no Australian authority publishes advance or deposit bands for accommodation assets, so nothing here should be read as one. Every file is assessed case by case. This is not an offer, not a quote, not a rate, and not a statement about how likely any application is to be approved. General information only, not financial advice.
How do you work out the real deposit and cash you need?
You derive it from your own contract rather than borrowing someone else's percentage, and it takes five steps you can do at a kitchen table. We are not going to tell you there is no published figure and then leave you without a way to budget, which is what every other page on this topic does and precisely why buyers end up trusting a number they found on a broker blog.
Contract deposit and lender equity are different numbers
Confusing the two is the most common budgeting error we see on accommodation files, because the word deposit is doing two different jobs in the same conversation.
The contract deposit is the amount you pay into the agent's or solicitor's trust account when contracts exchange. It is set by the contract, it is usually a modest share of the price, and it is the money at risk if you cannot complete. The equity contribution is the gap between what the lender advances and what you have to hand over at settlement, and it is the number this guide is about. The contract deposit is part of the equity contribution, not additional to it, but it is paid much earlier and on a completely different timetable.
Two consequences follow, and both cost people money. Your contract deposit is committed before any valuation exists, which is why the finance clause is the only thing standing between a low valuation and a lost deposit. And when a business broker or a selling agent quotes you a deposit figure, establish which of the two they mean before you write anything down, because they are frequently quoting the first while you are budgeting for the second.
Having the deposit does not mean the deal is fundable
Cash solves a funding gap. It does not solve a security problem or a document problem, and on accommodation assets those are the more common blockers. A caretaking agreement with less term remaining than the loan needs is not repaired by a larger contribution. Trading records that do not reconcile are not repaired by a larger contribution. A building with no alternative use in a location with no comparable sales is not repaired by a larger contribution. Work out the cash, then check the file will actually stand up, in that order.
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| Step | What you establish | Where you get it | Why it changes the answer |
|---|---|---|---|
| 1. Tenure | Whether the contract is freehold going concern, freehold without the trade, or leasehold and business only | The front page of the contract, and your solicitor | It decides which valuation basis applies, and the basis moves the cash more than the percentage does |
| 2. The basis the price is quoted on | Whether the asking price is a going concern figure or a property-only figure | The information memorandum, confirmed in writing by the selling agent | Applying a percentage to the wrong basis is the error that produces a shortfall weeks before settlement |
| 3. What sits inside the security | Whether cabins, plant, entitlements, chattels and any letting arrangement travel with the sale | The contract schedules and the plant list | Items outside the mortgage reduce what the lender holds without changing the price you pay |
| 4. Document life | Remaining term on any lease, caretaking agreement, letting agreement or licence | The lease or agreement itself, read by your solicitor before you sign | A term shorter than the loan needs is a structural block that no larger deposit repairs |
| 5. Everything that is not the deposit | Duty, adjustments, stock, working capital, professional fees and the valuation itself | Your accountant and solicitor, against your own jurisdiction and contract | These are cash at settlement too, and they are why a correctly calculated deposit still leaves people short |
The five questions to ask before you budget
- What valuation basis will the lender instruct, and does the contract match it?
- What security value will the lender accept on that basis?
- Is the facility one leg or split between property and business, and what advance applies to each?
- What is excluded from the security, and does anything I am paying for sit outside it?
- What has to be funded in cash at settlement that is not the deposit?
Who told you the deposit figure, and whose side are they on?
Ask yourself this before you build a budget on anything. The person most likely to have quoted you a deposit percentage is the business broker or selling agent acting for the vendor. They are not being dishonest and they are often broadly right, but they are paid on the sale completing, they are working from what other buyers have done rather than from what your lender will do, and they will not be the one funding the gap in six weeks.
The same applies, in the other direction, to us. Nothing on this page is a figure you can hold a lender to. The only number that binds anyone is the one on a written approval against a valuation that has actually been done. What you can do in the meantime is arrive prepared, because lenders assess the file before the asset on these deals, and the document pack a lender actually wants is the fastest way to find out whether your trading records reconcile before a lender tells you they do not. How the record is read is set out in how a lender reads motel trading records, and the asset-specific arithmetic in deposit against LVR on a freehold motel going concern.
What is the LVR actually applied to on a freehold going concern?
To a value the lender accepts, which is not automatically the contract price and not automatically the valuation figure either. Do not assume there is one universal denominator. A freehold going concern can be valued as the land, buildings and operating business together, and lenders can still give different lending weight to the freehold and business components, accept different security values, or split the transaction into separate property and business facility legs. Two buyers quoted the same percentage on the same building can need very different amounts of cash, because the figure underneath the percentage is not the same figure.
Going concern means three different things. Which one is on your contract?
Three, and they are not interchangeable, which is why searching the term returns such a strange mix of results. In auditing and accounting, going concern is a judgement about whether a business can keep trading, and the phrase "going concern issues" in that world is a solvency warning. In tax, the supply of a going concern is a specific treatment for goods and services tax purposes with conditions that have to be met and a contract drafted for it, and the Australian Taxation Office is the authority on it, not us. In valuation and lending, which is the sense this guide uses throughout, a freehold going concern describes what you are buying: the land, the buildings and the trading business together.
Two practical consequences. If someone tells you a business has going concern issues, that is an accounting statement about solvency and it says nothing about the tenure you are buying. And the tax treatment is a separate question from the valuation basis, decided by different people against different tests, so satisfying one tells you nothing about the other.
What does a freehold going concern actually contain?
Three parts, and the third one is the part almost nobody names. The Australian Valuers Institute, in its guidelines on valuation methodology for hotels and motels, breaks it into the freehold interest, meaning the land, buildings, fixtures and the goodwill attaching to the site or location; the business interest, meaning operating plant and equipment, licences, business goodwill and chattels; and the difference between owning both together and owning either alone. The guidelines call that difference the marriage value, and describe it as the amount someone would pay to obtain the property and the business as opposed to the one or the other interest. In eleven live search result pages on this topic, that term appeared nowhere. It is the whole reason two valuations of the same motel can differ by the price of a house.
The same guidelines are explicit about the other direction: the statutory valuation excludes the business interest and chattels. So a property-only assessment is not a discounted going concern figure. It is a different thing measured differently, and the gap between them is the business you thought you were buying.
The practical consequence, stated once. A buyer who reads a percentage quoted against a going concern figure and budgets against a property-only figure is short at settlement by the value of the business.
The going concern, in its parts
- Freehold interest Land, buildings, fixtures, and the goodwill pertaining to the site or location.Australian Valuers Institute, Guidelines on Valuation Methodology for Hotels and Motels, read 3 September 2026. The document carries no printed edition or date. Guidance to valuers on methodology; it does not set lending policy and does not state what a lender will advance.
- Business interest Operating plant and equipment, licences, business goodwill and chattels, excluding stock at hand.Australian Valuers Institute, Guidelines on Valuation Methodology for Hotels and Motels, read 3 September 2026. Methodology guidance only, not a lending rule.
- Marriage value The amount someone would pay to obtain the property and business together, as opposed to one or the other interest.Australian Valuers Institute, Guidelines on Valuation Methodology for Hotels and Motels, read 3 September 2026. Methodology guidance only, not a lending rule.
- What the statutory valuation leaves out The business interest and chattels, including soft furnishings, are excluded.Australian Valuers Institute, Guidelines on Valuation Methodology for Hotels and Motels, read 3 September 2026. Methodology guidance only, not a lending rule.
General information only. Definitions are current as at the review date shown. Not financial advice; consider your own circumstances and speak to a broker.
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| Valuation basis | What it includes | What it excludes | When a lender uses it |
|---|---|---|---|
| Freehold going concern | Land, buildings, fixtures, plant and equipment, licences, goodwill, chattels, marriage value | Nothing of the operating asset | Property and business bought together |
| Freehold, property only | Land, buildings, fixtures, location goodwill | The business interest and chattels | Property bought without the trade, or a vacant possession assessment |
| Leasehold or business only | The business interest and the benefit of the lease | The land and buildings | The business is bought without the real estate |
Can you challenge a commercial or going concern valuation?
You cannot negotiate a valuation upwards because you dislike the result, but you can request a review where there is a genuine factual error, an incorrect instruction, omitted evidence or the wrong valuation basis. The valuer remains independent and neither the lender nor a broker can simply choose a higher number. Under Prudential Standard APS 220, effective 1 January 2023, an authorised deposit-taking institution must ensure all valuations are appraised independently from its credit origination, credit assessment and approval process, and must have reliable valuation processes including review mechanisms. Independence and reviewability are not the same thing.
The procedures a valuer works to on real property are set by the profession rather than by a lender, in the Australian Property Institute guidance paper on valuation procedures for real property, effective 1 January 2025. If the problem is the basis rather than the evidence, the fix is the instruction or the facility structure, not an argument about the number. Where a valuation does land under the price, the options on a valuation shortfall are set out in order, and for the mechanics one level down see how a going concern valuation is built and going concern value against bricks value.
How do asset type, tenure and location change the accommodation LVR?
Through one mechanism above all others: how deep the resale market is under the security, and how long it would take to realise. That is why a specialised trading asset sits below an ordinary commercial building, and why the same asset four hours inland sits below its metropolitan equivalent.
The prudential framework is the clearest illustration of it, though it is not the rule that sets your percentage. Under Prudential Standard APS 220, effective 1 January 2023, the assumptions a lender applies to a property valuation allow a marketing period of up to 12 months, with a longer period of up to a maximum of 24 months adopted for specialised or unusual properties when professional valuers advise that this is appropriate. That is a prudential valuation assumption for capital purposes. The prudential regulator does not prescribe a motel, pub or park LVR, and this assumption does not mechanically dictate your percentage. What it does is explain why marketability carries so much weight on these assets, and why the fall-back position on a specialised security is treated as slower and less certain than on a warehouse or an office suite.
By the numbers
- Up to 12 months The period assumed for marketing a property under the prudential valuation assumptions.APRA, Prudential Standard APS 220 Credit Risk Management, effective 1 January 2023, read 3 September 2026. A valuation assumption for prudential capital purposes. Not an LVR cap and not a lending policy.
- Up to a maximum of 24 months A longer marketing period may be adopted for specialised or unusual properties when professional valuers advise that this is appropriate.APRA, Prudential Standard APS 220 Credit Risk Management, effective 1 January 2023, read 3 September 2026. Not a statement that any particular property will take that long to sell.
- The definition itself LVR is the ratio of the amount of the loan outstanding to the value of the property securing the loan.APRA, Prudential Practice Guide APG 112 Capital Adequacy: Standardised Approach to Credit Risk, Glossary, June 2024 version, read 3 September 2026. A definition, not a published maximum.
General information only. Figures are indicative where marked and current as at the review date shown. Not financial advice; consider your own circumstances and speak to a broker.
The regulator supervises the setting rather than publishing the number. In a letter to authorised deposit-taking institutions on commercial property lending dated 7 March 2017, APRA said institutions should consider their policies in relation to loan to valuation ratios in light of asset price growth, and raised concerns about reliance on material uplifts in land valuations to reduce the size of a sponsor's contribution of hard equity. That letter is nine years old and we carry it deliberately, for what it demonstrates rather than what it prescribes: the ratio is a control each lender sets and the regulator supervises. There is no published table to look up. For where the ceiling sits on ordinary commercial security, see the standard commercial position, and for the exposure side, why banks cap accommodation exposure.
Regional does not mean one lender category
The statistical geography is useful language, not lending policy. The Australian Bureau of Statistics divides Australia into five remoteness classes under the Australian Statistical Geography Standard: Major Cities, Inner Regional, Outer Regional, Remote and Very Remote, derived from the Accessibility and Remoteness Index of Australia Plus produced by the University of Adelaide. As at September 2026 Edition 4 has begun rolling out, its new Remoteness Structure is scheduled for March 2028, and the Bureau says Edition 3 should continue to be used during the transition unless otherwise specified, so that vocabulary remains the current reference.
It is not a lender's postcode category. Lenders set their own location tiers on their own criteria, the two systems do not align, and a property in one statistical class can fall into quite different tiers at two funders. What a lender is assessing is marketability: comparable sales, depth of the buyer pool, alternative use, local economic concentration and how long the asset may take to realise. A strong tourism corridor or a major regional centre reads very differently from an isolated asset even though both are called regional. You will find broker postcode matrices circulating on this question; every one we examined is a residential lending matrix, and we do not reproduce them. Regional property finance as a subject is covered properly in how lenders treat regional security.
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| Location class | What a lender is assessing | What tightens | What can offset it |
|---|---|---|---|
| Major Cities | Depth of the resale market and alternative use | Least | Trading performance and tenure |
| Inner and Outer Regional | Comparable sales, tourism dependence, single-industry exposure | Moderately | Population, proximity to a major centre, diversified demand |
| Remote and Very Remote | Time to sell, alternative use, whether a buyer exists at all | Most | Rarely offset by the asset; usually needs supporting security |
A venue in a capital city has buyers who want the site whatever happens to the trade. The same venue four hours inland has buyers who want the trade, and if the trade stops the pool thins quickly. That is what tightens, and it tightens on both the freehold and the going concern basis. The comparison plays out most visibly in hospitality, in a regional venue against a metro one, and holiday parks are the clearest case of the effect running the other way, covered in how a lender reads a large freehold holiday park.
Why management rights and letting pools need their own read
Because on these assets the income stream can be withdrawn by the people supplying it, and the corporate regulator classifies the arrangement as a scheme rather than as land. ASIC treats management rights and serviced apartment letting arrangements as managed investment schemes, and Regulatory Guide RG 140, published 12 April 2017, sets out why: the members do not have day-to-day control over the operation of the scheme, joining must be voluntary, and each owner and the operator who manages the letting must be able to withdraw from the scheme on no more than 90 days notice. Sit with that last condition. The income a lender is being asked to assess can be withdrawn, at short notice, by the people supplying it. That is not a criticism of a model that works well and is regulated for good reason. It is the reason the advance on these assets behaves differently, and it is a Corporations Act scheme classification rather than a lending rule.
Two mechanics follow and neither is published anywhere credible. The first is agreement term: lenders want a long balance remaining on the body corporate caretaking and letting agreements, and on a management rights purchase the remaining term is frequently the binding constraint on the whole deal. It is a term question rather than a percentage question. The second is split gearing: the manager's real estate lot and the business component are geared differently rather than as one asset, with the real estate component treated more generously. We state both qualitatively and without figures, because the figures circulating for both are broker-attributed. How the underlying business works is set out in how management rights work as a business, with the funding side in how a lender reads a management rights file and the letting pool question in management rights at scale.
Student accommodation: the disambiguation that costs people money
Two completely different products share the words. Search for student accommodation lending and the leading result is likely to be a student accommodation home loan advertised at a high percentage. That is a residential product, assessed on residential security, in an individual borrower's name, typically for a parent or investor buying a single apartment. The commercial purchase of a purpose-built student accommodation block, or a registered boarding or rooming house, is a completely different question with a completely different answer: specialised commercial security, limited alternative use, assessed on the operating model. Disambiguate by the security and the borrower, never by the words in the asset's name. The commercial framing is covered in student accommodation as an investment, and the strata letting question in how a manager's lot is assessed. Specialist disability accommodation has a further layer again, because all providers must be registered and all dwellings enrolled, which defines the operating envelope the income depends on; the detail sits in specialist disability accommodation finance.
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| Asset | What the lender actually holds | What tightens the advance |
|---|---|---|
| Management rights, the lot | The manager's real estate lot, held as property in its own right | Little, this is the strongest component of the deal |
| Management rights, the business | The caretaking and letting agreements, for whatever term remains | A short remaining term, which no deposit repairs |
| Serviced apartment | An individual strata lot, separate from any letting pool it sits in | A letting pool that is not part of the security being taken |
| Student accommodation block | A purpose-built building assessed as specialised commercial security | No realistic alternative use if the operating model stops |
| Specialist disability accommodation | A registered dwelling whose income depends on enrolment being maintained | Registration or enrolment that could lapse and take the income with it |
| All of the above | An income stream owners can withdraw from on short notice | The 90 days notice condition inside the scheme classification |
What changes the advance between two similar motels or two similar pubs?
The income mix changes it, because a lender is really asking one question: if this stops trading tomorrow, what is left, and who wants it? On a pub, gaming entitlements are the clearest example, because the entitlement is separately valued, separately regulated and separately transferable, and its treatment inside the security is a question in its own right, set out in what gaming entitlements do to a venue's funding with the wider lane at pub and hotel finance. On a park, the split between permanent residents and short-stay tourism changes the earnings profile, and whether cabins are chattels or fixtures changes what is inside the security altogether, which is the point of whether cabins count as part of the security. On a motel, a consistent multi-year occupancy and room rate record supports the assessment, and a missing year moves the file further than a bad one.
Two further movers sit underneath the rest. Tourism seasonality is assessed on the trough, not the average, on any asset whose earnings swing hard between quarters. And the completeness of the record matters more than most buyers expect: from the underwriter's seat, a well-documented soft year is easier to work with than a strong year that cannot be evidenced three ways. We do not name lenders here, because the same asset presents differently at different funders and the point is the mechanism rather than a shopping list.
What should happen before you sign an accommodation contract?
Three documents get read and one question gets answered in writing, and all of it happens before your contract deposit is committed rather than after. The documents are the contract, including exactly what is and is not included in the sale, any lease or caretaking and letting agreement with its remaining term, and the trading records for enough years to reconcile three ways. The question is which valuation basis the lender will accept and what security value it will accept on that basis.
A finance clause may not automatically solve a low valuation, and there is no standard period
Two things buyers assume that are not true. The first is that a subject to finance condition protects you from a valuation shortfall. It may not. The lender can approve a smaller facility against its accepted security value, which means finance has technically been approved while you are still short of the price, and whether that engages your condition is a question about the words in your contract rather than a general rule.
The second is that there is a customary period. There is not. We searched for a published Australian position on how long a finance condition should run on a commercial going concern purchase, across law firm commentary, state law society and conveyancing guidance and the valuation profession. Everything that came back was written for residential purchases, and the commercial case was discussed only on public forums. So the period in your contract was set by whoever drafted it, not by any standard, and the thing that should set it is how long a going concern valuation takes on a specialised trading asset in your location.
How long should you allow?
Longer than a residential purchase, and longer again if the asset is specialised or the location is thin. A going concern valuation assesses an operating business as well as a building, which takes more work than a bricks assessment, and comparable evidence in a thin market takes longer to assemble. We do not publish day counts, because the variance between a complete file and an incomplete one is larger than the variance between lenders, and a number here would be read as a promise. What you can do is ask your broker for a realistic window on your specific asset and location before your solicitor settles the condition period, rather than after. Where the dates are already fixed, finance for a fast settlement covers the options.
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| What to establish | Who gives it to you | What goes wrong without it |
|---|---|---|
| The valuation basis the lender will accept | Your broker, confirmed with the lender before the valuation is instructed | You budget against one figure and are funded against another |
| Whether the price is quoted going concern or property only | The selling agent, in writing | The percentage you applied was applied to the wrong number |
| What is included in and excluded from the sale | The contract schedules and plant list, read by your solicitor | You pay for items the mortgage does not hold |
| Remaining term on every lease, licence and agreement | The documents themselves, read before signing | A structural block that surfaces at credit and cannot be repaired with cash |
| How the finance condition is satisfied, extended or terminated | Your solicitor, in writing, before exchange | The condition lapses while you are collecting quotes |
| The full cash requirement, not just the deposit | Your accountant and solicitor, against your own jurisdiction | A correctly calculated deposit that still leaves you short on the day |
What cash do you need at settlement and immediately after?
More than the deposit, and the extras are why buyers who calculated the deposit correctly still turn up short. The deposit is the number everybody researches. The rest is the number nobody mentions until a settlement statement lands, and on a trading accommodation asset it is not a rounding error.
We do not put figures against these, because duty is set by each state and territory revenue office and varies by jurisdiction and by what is being transferred, adjustments depend on your contract, and stock and working capital depend on the business. What we can do is make sure nothing on the list is a surprise. Take this table to your accountant and your solicitor and get your own numbers against every row before you exchange.
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| What you have to fund | Why it lands on you and not the loan | Where the published position is |
|---|---|---|
| Transfer duty on the property, and duty on business assets where it applies | Lenders generally advance against the security value, not against the cost of acquiring it | Three jurisdictions publish on land and business transfers specifically: New South Wales on business purchases, Victoria in its evidentiary requirements manual including transfers of land, business and licensed premises, and South Australia in its stamp duty document guide. No published position was located for the other five |
| Goods and services tax, unless the going concern treatment applies to your contract | Where the treatment does not apply, or the contract is not drafted to secure it, the tax is cash you must fund at settlement even if you later recover it | The Australian Taxation Office ruling on the supply of a going concern, GSTR 2002/5, with its selling a going concern and goods and services tax at settlement guidance |
| Whether the premises are commercial residential premises | The classification changes the goods and services tax treatment of the property itself, separately from the going concern question, and most buyers of a motel or park have never heard of it | Australian Taxation Office guidance on commercial residential premises, read with your accountant against your own contract |
| Stock on hand at settlement | It is counted and paid for separately from the price, and it is excluded from the going concern valuation | The stocktake, on the day, against the contract terms |
| Settlement adjustments | Rates, land tax, prepaid bookings, deposits held for future stays and staff entitlements all get apportioned | Your solicitor, from the adjustment sheet |
| Working capital for the first trading cycle | You take over payroll, superannuation, channel commissions and supplier terms from day one, before your first revenue clears | Your own cash flow forecast, built on the trough rather than the average |
| Professional and lender costs | Valuation, legal, accounting, searches, licence and permit transfers, and any establishment costs | Quotes obtained before exchange, not estimates |
Do not use every available dollar as the deposit
An accommodation business can look cash-rich on settlement day and be tight a fortnight later. It takes deposits for future stays, which sit in the bank looking like cash and are in fact a liability you inherit, and it pays out on a roster and a supplier cycle that do not pause because ownership changed. A larger contribution that leaves you with no working capital is a worse position than a smaller contribution that leaves you funded through the first cycle. Budgeting is covered further in what an accommodation purchase budget has to cover, and the seasonality question in working capital through the off season.
Two settlements, one deposit: when the money is coming from selling your house
This is the most common shape we see and almost nothing published on the topic addresses it. A great many accommodation buyers are not property investors adding an asset. They are people selling a home in a city to buy a business and a place to live in one transaction, which means the deposit does not exist yet on the day they want to make an offer.
That turns the problem from a lending question into a sequencing question, and the sequencing is harder than the lending. A purchase made conditional on selling your home is a weaker offer than an unconditional one and vendors know it. Two settlement dates set by two different sets of parties will not line up on their own. And the equity is real but it is not liquid on the day the contract deposit is due.
There are three honest ways through. Sell first and rent, which is the cheapest and the least convenient. Line the settlements up contractually, which needs a cooperative vendor and a solicitor drafting for it from the start. Or bridge the gap, which Switchboard does arrange, at a cost, and which turns a timing problem into a short-dated debt with an exit that has to be certain. Bridging, caveat and second mortgage options sets out how the short-dated instruments compare. The order of operations matters more than the product: get the sale of your home under contract, or get a written position on bridging, before you commit a contract deposit on the purchase.
What do you live on in the first trading cycle?
Whatever the business generates after it pays everyone else, which for an owner operator in the first year is usually less than they modelled. No lender will raise this with you, which is exactly why it belongs here. Your own drawings are an operating cost and belong in the forecast. If you are living on site, the value of that has to be understood properly rather than assumed. And you should know before you settle that your borrowing profile has changed: you are now self-employed with a new entity and no trading history in your own name, which makes personal lending harder for a period, not easier. If a home purchase or a refinance is anywhere in your plans for the next couple of years, read how accommodation owners get a home loan afterwards before you settle, not after.
What do you do when the valuation or the lender comes back lower than you budgeted?
Work the causes in order, because four of the five have nothing to do with the lender and only one is solved by shopping around. Most people do the opposite: they ring three more lenders first, burn two weeks and several credit enquiries, and arrive back at the same number with less time on the finance clause.
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| Check, in order | What you are testing | What it fixes if it is the cause |
|---|---|---|
| 1. The valuation basis and the accepted security value | Whether the advance was calculated on the same basis the contract is written on, and what value the lender actually accepted | Everything, and this is the most common cause on accommodation files |
| 2. Factual errors in the valuation | Whether there is a genuine error, an incorrect instruction or omitted evidence | Grounds for a review, which is different from arguing the number |
| 3. What was inside the security | Whether chattels, cabins, plant, entitlements or a letting arrangement were excluded | Often recoverable by evidencing or restructuring what transfers |
| 4. The records and the document life | Whether the accounts reconcile, and how much term remains on the lease or agreement | The first can be fixed with work; the second only with a variation negotiated with a third party |
| 5. The lender | Whether this funder's appetite for this asset class and this location is the binding constraint | Only worth testing once one to four are clear, and it is the last step, not the first |
Two things are worth saying plainly about step five. A different lender changes the appetite, not the asset, so if the constraint is the security or the records then every funder returns a version of the same answer. And where the value is simply lower than the price, the economic options are narrow: renegotiate, contribute more cash, add acceptable supporting security, document vendor finance or another subordinated layer, or rely on whatever contractual rights your solicitor confirms apply.
Already under contract? The first call is legal, not another lender
The finance clause is now the most important document you own. What you need to establish, that day, is when the condition expires, what notice you have to give and in what form, whether an extension is available and who must agree, and precisely what happens to your contract deposit if the condition is not satisfied. Only then work the causes above. Doing it in the other order is how people find out the condition lapsed while they were collecting quotes. Where a notice has been served, what a notice to complete does sets out the position, and a vendor carrying part of the price is sometimes the cleanest answer available and sometimes a trap, which is the subject of when vendor carry is smart and when it is not.
You already own it: refinancing, or an interest only period about to expire
Then you are being reassessed against today's value and today's trading, not the numbers that got you approved, and that is the whole risk. Everything above about tenure, basis, security contents and location applies on the way out of a facility exactly as it applied on the way in. The differences are that you now have a trading record under your own management, which can help you or expose you, and that you have a date you did not choose. The failure mode is arriving at expiry with a soft trading year and no time. Refinancing at interest only expiry covers the mechanics, what happens when a covenant is breached covers the harder version, and how a lender reads an accommodation refinance covers what they look at first. Where the trading itself is the problem rather than the facility, financing an underperforming accommodation business is written for it, and the honest position is that a soft year you can document is a workable file while a soft year you cannot evidence is not.
How do supporting security, vendor finance and second-ranking debt fit into the deal?
They close a gap between what one lender will advance and what the purchase costs, and every one of them does it by adding either security or subordination rather than by raising the advance on the accommodation asset. That distinction is the whole section. Above a first mortgage sit, in rough order, additional security over a property you already own, a second mortgage behind the first lender, mezzanine or subordinated debt, private credit, and vendor finance where the seller carries part of the price.
This section carries no figures, deliberately. No advance percentage, no rate, no fee, no term. Everything in this part of the market is priced file by file, the range is genuinely wide, and a published number here would do more harm than good on a topic where people are often working to a settlement date.
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| Layer | Where it sits | What it costs you, beyond price |
|---|---|---|
| Supporting security over another property | Alongside the accommodation asset, as additional security for the same obligation | The second property is no longer independently saleable or refinanceable while the structure stands |
| Second mortgage | Behind the first lender on the same security, with that lender's consent | Subordination, and consent risk because the first lender can refuse |
| Mezzanine or subordinated debt | Between senior debt and equity, often without a registered first-ranking security | Covenants that constrain how you run and when you can sell the asset |
| Private credit | Wherever the funder is prepared to sit, file by file | Capitalised interest and fees counted inside the combined ratio |
| Vendor finance | Behind the lenders, carried by the seller | Its own security and enforcement questions, and it needs a willing vendor |
A second mortgage requires the first lender's consent, which is not automatic and is sometimes simply refused; how a second mortgage works covers the consent mechanics, which is where most of these deals actually stall. Mezzanine structures are set out in mezzanine finance. On accommodation assets specifically the funder map matters more than the product name, which is what the non-bank accommodation map is for, with the mechanics of that market under private lending.
Count capitalised interest and fees when you calculate total leverage
Private lenders generally calculate a combined loan to value ratio by adding the first mortgage balance, the requested second mortgage, and the capitalised interest and fees, and measuring the total against the appraised value. Most buyers do the sum without that last part. The capitalised amount is real debt against the same security, it accrues from day one, and leaving it out of your own arithmetic is how a structure that looked comfortable at the start is uncomfortable well before its term ends.
For context on how this layer of the market behaves rather than how it prices, the Reserve Bank's Financial Stability Review of March 2026 reports that liaison suggests there has been some easing in lending standards by non-bank lenders, though to date this appears to have been modest, with the most notable easing reported for property developers. That observation concerns non-bank development lending rather than accommodation acquisition, it describes lending standards rather than any ratio, and it is a liaison-based characterisation rather than a lending policy. It is not a suggestion that easier terms are available to you.
Can supporting security really fund the whole purchase price?
The whole price, sometimes. A hundred per cent advance against the accommodation asset alone, no. The claim you will meet is that cross-collateralising another property you own funds an accommodation purchase to the full price with no cash deposit. It appeared in three separate generated summaries in our capture, attributed to three different broker sites, unqualified in all three. What is actually happening is that more security has been added, so the ratio against each individual security stays inside what each lender accepts while the total facility covers the price. That is a real technique and it is not the same thing as gearing the motel higher.
Here is the part the accommodation buyer never sees. The technique is imported from residential investor lending, and that field's own published corpus is uniformly against it: run the risk-side query rather than the deposit-side query and the results are wall to wall warnings, with the leading summary naming total loss of portfolio control as the first risk. The same engine that offers the technique as an answer to how do I buy with no deposit warns against it as an answer to what are the risks. Nothing is being hidden. The question simply determines which half of the truth arrives.
And the risk profile changes in kind, not just degree, when the second asset is specialised. Cross-collateralise a house against a trading asset in a thin market and the property that would take longest to clear is the one standing behind the whole structure, while the house that would sell in a month cannot be sold independently while it does.
How do you get the family home released later?
That is the question to ask before you agree to the structure, not after, because these arrangements are far easier to enter than to unwind and the unwinding is where the real work sits, particularly if values have moved or one asset has underperformed. What you want in writing is what has to be true for the first lender to agree to a release, what the remaining security has to be worth at that moment, and how long the process takes. Unwinding a cross-collateralised structure is the practical answer, and where the facility itself is the problem rather than the security, restructuring an accommodation facility covers the alternative route. For the asset-specific version, see motel finance.
How much a lender will advance against an accommodation property is set by three things you can identify before you apply: the asset type, the tenure, and the location. What almost nobody tells you is that no Australian regulator sets a figure and no Australian authority publishes one, and that every loan to valuation source you will find from those bodies is written for residential mortgage lending. What is published, and what actually explains the pattern, is the prudential valuation assumption that a specialised property may take up to twice as long to sell, the regulator's definition of the ratio itself, the valuers' decomposition of a going concern into freehold interest, business interest and marriage value, and the scheme classification that makes a letting arrangement a withdrawable income stream rather than real property. Get the basis right and the tenure clear, and the percentage becomes the least interesting part of the conversation.
Key takeaway: ask which valuation basis the lender will accept, and what security value it accepts on that basis, before you sign the contract. That question moves the cash you need more than any percentage does.Frequently Asked Questions
There is no single number, and on an accommodation asset there are three variables rather than one: the asset type, whether you are buying the property and the business together or one without the other, and where the property sits. Standard commercial security is one question and a specialised trading asset such as a motel, pub, park or letting business is another, and the second sits lower than the first. No Australian regulator sets a maximum for either, and no Australian authority publishes one for accommodation, so every percentage circulating online traces back to a lender's own product page or to a broker. Treat any figure you read, including ours, as an observation rather than a policy you can hold a lender to. The wider lane is set out across our accommodation finance coverage.
It depends first on tenure, not on the price. A freehold going concern purchase, where you buy the building and the trading business together, is assessed on a different valuation basis to a leasehold purchase where you buy only the business and the benefit of the lease, and the cash you need at settlement moves with that basis. Switchboard does not publish a deposit percentage for motels, because no regulator or authority publishes one and a borrowed figure would be a guess dressed as a rule. The practical step is to establish which basis your contract is written on, and which value the lender will actually accept, before you budget. Our motel deposit guide works through it.
No, and confusing them is the most common budgeting error on accommodation purchases. The contract deposit is what you pay into a trust account when contracts exchange, it is set by the contract, and it is the money at risk if you cannot complete. The lender's requirement is the equity contribution, the gap between what the lender advances and what you hand over at settlement. The contract deposit forms part of that contribution rather than sitting on top of it, but it is committed much earlier and before any valuation exists, which is why the finance clause is the only thing standing between a low valuation and a lost deposit. When an agent or business broker quotes you a deposit figure, establish which of the two they mean before you budget. The disambiguation above sets out the consequences.
Sometimes, and it is important to understand what it does and does not do. Usable equity in a property you already own can be released as a separate approved facility and applied to the purchase, which reduces the cash you have to find on the day. It does not create equity and it does not raise the advance against the accommodation asset. What it does is increase your total debt and extend the lender's recourse to a second property, which is a decision about that property rather than a decision about the deposit. The questions to ask before agreeing are what has to happen for that property to be released later, who has to agree, and how long it takes. Unwinding a cross-collateralised structure covers the exit.
No, and the difference is where most of the confusion on this topic comes from. Funding the whole purchase price means the total of every facility in the structure covers the price, usually because supporting security over another property has been added. A hundred per cent loan to valuation ratio would mean a single facility advanced at the full value of the accommodation security on its own, which is not how these assets are funded. In the first case the ratio against each individual security stays inside what each lender will accept; the price is covered because there is more security, not because the accommodation asset is geared higher. If someone offers you no deposit, they are describing the first thing, and the right question is what is being pledged and how you get it back. Getting the second property released is the part to settle first.
It means you are buying the land, the buildings and the trading business together in one transaction, rather than buying the property without the trade or the business without the real estate. The Australian Valuers Institute breaks the interest into three parts: the freehold interest, being land, buildings, fixtures and the goodwill attaching to the site; the business interest, being operating plant and equipment, licences, business goodwill and chattels; and the marriage value, being what someone would pay to obtain the property and the business together rather than either on its own. The same phrase carries two other meanings elsewhere and they are not interchangeable: in accounting, going concern issues are a solvency warning, and in tax the supply of a going concern is a separate treatment for goods and services tax with its own conditions. The full tenure comparison sits in our freehold and leasehold guide.
It depends on what you are buying and on what the lender accepts as its security value, and this is the single most expensive thing to get wrong. A freehold going concern comprises the freehold interest, the business interest and the marriage value of acquiring both together, while a statutory valuation excludes the business interest and chattels, per the Australian Valuers Institute guidelines for hotels and motels. Do not assume there is one universal denominator: a lender can give different lending weight to the freehold and business components, or split the transaction into separate property and business facility legs. Ask for the accepted security value for each leg and the percentage applied to that value, before you sign rather than after the valuation lands. The going concern valuation explainer shows how the figure is assembled.
Loan to value and loan to valuation describe the same ratio, and there is no published good figure for either on an accommodation asset. The regulator defines it as the amount of the loan outstanding measured against the value of the property securing the loan, and stops there. What matters far more than the percentage is which value the percentage is applied to, because a figure quoted against a going concern valuation and budgeted against a property-only value leaves you short at settlement by roughly the value of the business. The useful test is not the highest ratio someone will offer you, it is the one you can service through a soft trading year and refinance out of at the end of the term. The shortfall guide covers what happens when the two do not line up.
You often will, because valuations are ordered after a lender has a file, and that is exactly why the finance clause matters more than most buyers realise. A subject to finance condition is not a guarantee that a valuation shortfall releases you. The lender can approve a smaller facility against its accepted security value, which means finance has technically been approved while you are still short of the price. What you need before you sign is your solicitor's written position on when the condition expires, what notice satisfies or terminates it, whether an extension is available and who must agree, and precisely what happens to your contract deposit if the condition is not met. What a notice to complete does sets out the position once one is served.
Transfer duty, goods and services tax where the going concern treatment does not apply to your contract, stock on hand counted at settlement, settlement adjustments including rates, land tax and deposits already taken for future stays, working capital for the first trading cycle, and professional and lender costs including the valuation. Lenders generally advance against the security value rather than against the cost of acquiring it, so these land on you as cash. Switchboard does not publish figures for any of them, because duty is set by each state and territory revenue office and varies by jurisdiction and by what is being transferred, and the rest depend on your contract and the business. Get your own numbers from your accountant and solicitor before you exchange rather than after. Work from the settlement cash checklist.
There is no published figure, and on this asset the percentage is rarely the binding constraint anyway. The remaining term on the body corporate caretaking and letting agreements usually is, because the agreements are the instrument the income flows through and a term expiring inside the loan term is a structural problem no deposit repairs. ASIC treats management rights and serviced apartment letting arrangements as managed investment schemes under Regulatory Guide 140, on the basis that members do not have day-to-day control, that joining must be voluntary and that owners must be able to withdraw on no more than 90 days notice. The manager's real estate lot and the business component are also assessed separately rather than as one asset, and the real estate component is generally treated more generously than the business component. How the underlying business works is set out in our management rights guide.
The lender advances against the value it accepts, not against the contract, so a shortfall lands on you as extra cash at settlement. On accommodation assets this happens most often where the contract is written on a going concern basis and the lender accepts a different basis, which is why establishing the basis early matters so much. Where there is a genuine factual error, an incorrect instruction, omitted evidence or the wrong basis, you can request a review; where the value is simply lower than the price, the options are to renegotiate, contribute more cash, add acceptable supporting security, document vendor finance or another subordinated layer, or rely on whatever contractual rights your solicitor confirms apply. The inverse case gives you nothing extra, because lenders assess against the lower of value and price. The shortfall guide sets out the options in order.
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