Chattel, Second Mortgage or Private: Funding a Plant Buy
Funding a Pre-EOFY Plant Purchase (2026) | Switchboard Finance
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Chattel Mortgage · Second Mortgage · Private Lending
Chattel, Second Mortgage or Private: Funding a Plant Buy
A pre-EOFY plant purchase usually comes down to three finance doors: a chattel mortgage on the machine, a second mortgage to release equity for the deposit, and private lending when speed is the only thing that matters. With the instant asset write-off proposed permanent from 1 July 2026 but not yet law, the old 30 June cliff is easing, so the smarter move is to match the door to the deal, not the calendar.
Quick Answer
The best way to fund a pre-EOFY plant purchase depends on the deal, not the date. A chattel mortgage finances the machine, a second mortgage releases equity for the deposit, and private lending covers a tight supplier deadline. A broker matches the structure to your scenario.
Start With the Deal, Not the EOFY Calendar
The best pre-EOFY plant finance decision starts with the deal in front of you, not the date on the calendar. A manufacturer buying a press, a CNC, or a new production line before 30 June has three realistic doors: a chattel mortgage on the machine itself, a second mortgage to release equity for the deposit, and private lending when the supplier clock is the binding constraint. Each one solves a different problem, and the call we make on these files is almost always driven by what the deal needs, not by the financial year clicking over.
The reason EOFY has lost some of its urgency is the instant asset write-off, proposed permanent from 1 July 2026 in the Federal Budget, though the measure is not yet law. That proposal would ease the write-off cliff that used to force a deadline rush, so EOFY now reads more as a strategy window than a panic, while the current 2025-26 write-off still runs to 30 June 2026. It is worth being precise here: most new factory plant costs well above the write-off threshold, so the machine itself is depreciated through the small business depreciation pool, not instantly expensed. The write-off easing is ambient context, the depreciation treatment is the real tax mechanic.
Rates and broader business conditions are part of the backdrop too. The cash rate environment shifts at each Reserve Bank of Australia decision, and rather than try to time it, the first thing we map on a plant file is the structure that fits the asset and the cashflow. If you want a wider view across every lane we broker for manufacturers, the manufacturing hub and the manufacturing loan pack set out the full toolkit, and the pre-EOFY cashflow finance decision map covers the cashflow-gap version of this same question.
Chattel Mortgage: Finance the Machine Itself
A chattel mortgage is the default door for buying the plant itself, because your business owns the asset from settlement while the lender holds a security interest over it. You finance the machine over a set term, claim the GST credit on your next BAS, and the plant goes into the depreciation pool from day one. For a manufacturer adding a single piece of equipment, this is usually the cleanest and cheapest structure available.
The lever inside a chattel mortgage is the deposit and the balloon payment, both of which shape your monthly repayment. A larger deposit lowers the financed amount, and a balloon or residual at the end keeps the monthly number down during the term, indicative and varies by lender. This is exactly where a second mortgage can feed in: if you release equity to fund a bigger deposit, the chattel you need on the machine shrinks. The chattel mortgage glossary entry walks through the mechanics, and the chattel mortgage versus car loan comparison shows how asset security changes the assessment.
Second Mortgage: Release Equity for the Deposit
A second mortgage releases equity from a property you already own so you can fund the deposit on the plant, while the first mortgage stays in place. It sits behind the existing first mortgage in priority, and the size of the release is measured against the equity available, indicative and varies by lender. For a manufacturer who is asset-rich but does not want to disturb a good first-mortgage rate, this is the way to put deposit cash on the table without refinancing the whole facility.
The trade-off is timing. On a bank-consented second mortgage, first mortgagee consent is the long pole and the process runs longer than a straight asset finance approval, indicative and varies by lender. That is fine when you have runway, and it pairs naturally with a chattel mortgage on the machine: equity release for the deposit, chattel for the asset. If the deposit maths is the part you are stuck on, the how a second mortgage works guide covers the sequence end to end.
Private Lending: When Speed Is the Constraint
Private lending is the door you reach for when speed is the constraint, not price. A specialist private funder assesses the deal on security, equity and exit rather than income servicing, which is why an indicative offer can land quickly and settlement can run from around 24 hours to 7 days, indicative and varies by lender. When a supplier wants the deposit now to hold the order slot and the price, that speed is the whole point.
The thing that makes private lending work is the exit strategy. Interest is typically capitalised and repaid at exit, so what has to be true for the exit is the question we test before recommending it: a refinance into a bank facility, a property settlement, or incoming receivables that clear the facility. A caveat loan is one fast form of this, secured by a caveat over property, and the second mortgage versus caveat loan comparison and the caveat loans page set out when each one fits.
Match the Door to the Deal
The decision is rarely about which product is best in the abstract. It is about which constraint is binding on your particular plant buy. Pick the scenario that matches yours below to see where it usually lands.
Select your scenario
Chattel mortgage on the machine
You have the deposit and you simply need to finance the asset over a term. A chattel mortgage owns the plant from settlement, lets you claim the GST credit on your next BAS, and depreciates the machine through the pool. This is the cheapest and cleanest door for most single-machine purchases.
Asset financeThe Manufacturer Sweet Spot
For an asset-rich manufacturer with runway before settlement, the structures are not mutually exclusive. The combination that lands most often is a second mortgage to release the deposit and a chattel mortgage on the machine itself, with private lending held in reserve only if the supplier deadline tightens.
Funding a pre-EOFY plant purchase is a matter of matching the door to the deal. Chattel for the machine, a second mortgage for the deposit, private lending for speed. With the instant asset write-off proposed permanent from 1 July 2026 but not yet law, the write-off cliff looks set to ease from next year, so you can plan the plant buy around the business rather than a tax date, while keeping the current 30 June 2026 deadline in view. The plant itself is depreciated through the pool, and the structure you choose shapes both this purchase and your next one.
Key takeaway: Match the door to the deal, not the calendar, and let a broker line up the structure that fits the asset, the deposit and the deadline.Frequently Asked Questions
The best way to finance new plant before EOFY depends on the deal in front of you, not the date. A chattel mortgage suits buying the machine itself, a second mortgage suits releasing equity for a deposit, and private lending suits a tight supplier deadline. A broker matches the structure to your scenario rather than to the calendar.
Using a second mortgage for an equipment deposit is a common manufacturer play because it releases equity from a property you already own to fund the deposit, which then shrinks the chattel finance you need on the machine. The first mortgage stays in place, and the release is sized against the equity available, indicative and varies by lender.
Chattel mortgage and private lending solve different problems when buying plant. A chattel mortgage finances the asset itself over a set term, while private lending funds a deposit or a deadline quickly and is repaid at exit. Most manufacturers use a chattel mortgage for the machine and only reach for private lending when speed is the binding constraint.
The instant asset write-off looks set to ease the EOFY deadline for most plant because it is proposed permanent from 1 July 2026, though not yet law, which would soften the cliff that used to force a 30 June rush. Larger machines sit above the write-off threshold and are depreciated through the small business pool rather than written off immediately, so EOFY becomes a strategy window rather than a deadline.
How fast finance settles before 30 June depends on the structure you pick. Private lending is the speed option, with an indicative offer often same day and settlement that can run from around 24 hours to 7 days, indicative and varies by lender. A bank-consented second mortgage is slower because first mortgagee consent is the long pole, so a broker route matters when the supplier deadline is close.
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