Can I use my apartment or unit-title property to secure a business loan?

Yes, you can. An apartment, a townhouse in a complex or a unit-titled office can secure business lending in New Zealand, either as a first mortgage or as a second mortgage behind your bank. The catch is that you’re never just offering your own unit. A lender is effectively lending against a share of the whole building, so the body corporate’s paperwork gets read almost as carefully as your own.

Mr hears this question a lot from owners who’ve built up equity in a city apartment, or who own the small unit their business works out of. The good news: a well-run building with tidy records is ordinary, comfortable security. The work is in proving it’s well run.

What am I actually offering as security?

Unit titles are governed by the Unit Titles Act 2010. settled.govt.nz describes the owner’s interest as “a defined part of a complex”, such as an apartment, a carpark or a storage space, alongside a share of the common areas: the lifts, lobbies, roof, driveways and outside walls.

So a unit title comes in three pieces:

1. Your principal unit, which you own and maintain on the inside.
2. Any accessory units, such as a carpark or storage locker.
3. A share of the common property, owned and looked after by the body corporate, which every unit owner automatically belongs to.

That third piece is the reason lenders go further than they would with a standalone house. If the roof needs replacing, the cost lands on every owner through levies. A lender wants to know about that before you’ve signed, not after.

Mr says: With a house, the lender asks “what’s it worth?” With a unit title, it also asks “what’s the building about to cost its owners?”

What do lenders read in the body corporate papers?

Sellers of unit-title property must hand buyers a pre-contract disclosure statement. According to settled.govt.nz, for an existing unit it covers weathertightness issues, the body corporate’s financial statements and audit reports, general meeting minutes, legal proceedings, fees and levies, and upcoming maintenance or improvement plans. A careful lender wants much the same picture when you borrow against a unit you already own.

Document	What the lender is looking for	Warning signs
Latest financial statements	A body corporate that balances its books and holds some reserves	Persistent deficits, large unpaid levies from other owners
Long-term maintenance plan	Big-ticket work planned and costed years ahead	No plan, an outdated plan, or major work with no money set aside
Minutes of recent general meetings	What owners have actually discussed and voted on	Talk of re-cladding, remediation, special levies or legal action
Levy statement for your unit	You’re up to date	Arrears on your own unit
Engineering or seismic reports	The building’s structural position	An earthquake-prone notice in a zone where the rules still apply
Insurance details	The building is insured and the excess is manageable	Very high excesses, or cover that’s hard to place

Your body corporate secretary or manager can usually supply most of this quickly. Ask for it before you apply. Lenders and valuers move faster when the file arrives complete.

How have the maintenance plan rules changed?

This is one area where the law has tightened recently, and it works in your favour as a borrower. HUD confirms the final provisions of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022, including the long-term maintenance regime, came into force on 9 May 2024.

Unit Titles Services sets out the current position:

• every body corporate needs a long-term maintenance plan covering at least 10 years;
• large developments, meaning 10 or more principal units, need a plan covering 30 years, with detailed costings for the first decade, reviewed every three years;
• a body corporate must set up a long-term maintenance fund unless owners decide otherwise by special resolution, and the fund doesn’t have to cover the full planned cost.

That last point is worth reading twice. A building can have a thorough 30-year plan and still be well short of the money to carry it out. Lenders look at both: is the work planned, and is it funded? If a large cladding or roof job is due in the next few years and the fund is thin, expect questions about special levies and how you’d pay your share.

Our page on what a lender checks on your property covers the valuation side. The body corporate review sits on top of that.

Does the 2026 earthquake-prone building change help me?

For many apartment owners, yes. Changes to the earthquake-prone building system have cleared Parliament, and building.govt.nz sets out two key dates:

• From 26 September 2026, the system no longer applies in Auckland, the Chatham Islands and the upper North Island low seismic zone. Existing designations there are being removed and new ones can’t be made. Some parts of Dunedin, coastal Otago and Stewart Island move from a low to a medium seismic zone.
• From 1 July 2027, only buildings in medium and high seismic zones can be earthquake-prone, and only if they’re unreinforced masonry, or heavy-material buildings such as concrete of three or more storeys. Everything else comes off the register.

Why this matters for borrowing: an earthquake-prone notice has long been one of the biggest reasons a lender would decline an apartment or demand a much larger equity buffer, because strengthening costs flow straight to owners through the body corporate. If your building’s notice has gone, or is due to go in July 2027, the security may look quite different from how it did a year ago.

A few cautions from Mr. A lifted designation doesn’t make an engineering report disappear, and valuers and insurers may still ask about seismic ratings. For buildings that stay in the system after July 2027, the new tiered requirements still mean real costs. Either way, have the latest report and any council correspondence ready.

Want to know how your unit stacks up before you collect every document? Tell us about it in a quick enquiry. Nothing touches your credit file at that stage.

Which units do lenders find harder?

Most apartments and townhouses sit comfortably within normal lending. A handful of situations reduce the number of lenders willing to help, or the amount they’ll lend:

• Very small studios. Many lenders have a minimum floor area, and tiny units can fall below it.
• Serviced, hotel-style or student apartments, especially where a management agreement limits how the unit can be used or let.
• Leasehold units, where the land under the building is leased rather than owned, and the remaining term and ground rent matter.
• Buildings with unresolved weathertightness problems, or a claim still before the courts.
• Units where levies are in arrears, or where the body corporate itself is in a dispute.
• Mixed-use buildings with ground-floor bars or restaurants, which some lenders treat more cautiously.

None of these is automatically a no. They mean fewer doors are open, so it pays to have the full story ready. Specialist and private lenders often look at these properties more flexibly than mainstream banks, usually lending against a lower proportion of the value.

Mr’s rule of thumb: If the building has a “story”, tell it in your first conversation, with the documents to back it up. A story told by you is context. A story found by the valuer is a delay.

What about a unit-titled office, shop or warehouse?

Plenty of New Zealand businesses own the small office, workshop or warehouse unit they trade from, and many of those are unit titles too. The same body corporate checks apply, plus the commercial questions: is your business the occupier, is there a lease to a related entity, and how specialised is the space?

A unit-titled commercial property can secure lending in the same $20,000 to $5,000,000 range as residential property. Our page on using commercial or rental property as security goes through how lenders view owner-occupied and tenanted commercial units.

Illustrative example: the Wellington designer and the remediated building

This example is invented to show how the process works. It isn’t a real client.

A graphic designer runs a small studio and owns a two-bedroom apartment in a 1990s Wellington building. She wants to borrow against her equity to buy out a departing business partner, using a second mortgage behind her bank.

Before applying, she asks the body corporate manager for the paperwork. Here’s what turns up:

• The building was re-clad several years ago after weathertightness problems. Work was completed and signed off, and the records are on file.
• The 30-year maintenance plan shows lift replacement in four years, and the maintenance fund already holds most of the expected cost.
• The minutes mention nothing about new legal action or special levies.
• Her levies are fully paid.
• The building is concrete and four storeys, so she includes the latest engineering summary showing it isn’t earthquake-prone.

She sends everything with her enquiry. The lender reads the remediation history as a strength: the expensive problem has been fixed and paid for. The valuation supports enough equity behind her first mortgage, and the application moves forward on a normal footing. Had the re-clad still been ahead of the owners and unfunded, the conversation would have been very different.

How much can I borrow against my unit?

There’s no special unit-title limit. What decides it:

• the valuation of your unit, including its accessory units;
• what’s already secured against it, such as your first mortgage;
• the building’s position: big unfunded works or an active dispute lower what lenders will advance;
• the business purpose and how the loan will be repaid, from trading income, a sale or a later refinance;
• your wider position, including turnover, any IRD arrangements and credit history, all looked at case by case.

If the equity is there, a second mortgage for business is often the practical route, because it leaves your home loan in place. If the security doesn’t suit the timing, a trading business may qualify for an unsecured option, typically $5,000 to $500,000, sized on turnover and bank statements. The funding readiness check gives a quick read on where you stand. And if your home is a cross-lease rather than a unit title, see our separate guide on borrowing against a cross-lease property.

Your unit-title document pack

• Copy of your record of title, including any accessory units
• Latest body corporate financial statements
• Long-term maintenance plan and maintenance fund balance
• Minutes from the last two general meetings
• Current levy statement showing no arrears
• Building insurance certificate and excess
• Any weathertightness, remediation or engineering reports
• First mortgage statement
• One line on the loan’s purpose and how it gets repaid

Ask Mr about borrowing against your apartment or unit

Plenty of owners assume an apartment is “too complicated” to borrow against, so they never ask. Often it isn’t. A building with a funded maintenance plan, clean minutes and no seismic cloud is good security. And since 26 September, earthquake-prone designations across Auckland are being removed, which some owners haven’t yet connected to their borrowing options.

Here’s how asking works. It takes about a minute, and there’s no credit check when you first enquire. Your enquiry isn’t shopped around to a crowd of lenders waiting to bid, so you won’t be fielding calls from strangers. A real person reads your enquiry, looks at the unit, the building and your business together, and calls you, even if the honest answer is “not yet, sort the levy arrears first”.

Please fill the form in accurately: tell us it’s a unit title, roughly what’s owed on it, and anything you know about the building’s history. Accurate answers mean the first option we bring you is one that suits your building, rather than one that falls over at valuation.

See if your unit qualifies →