Unsecured business debt can carry an interest rate anywhere from 20 to 50 percent, sometimes with daily repayments taken straight out of the business account, which puts a real strain on cash flow even when the business itself is doing fine. Rolling that debt into a cheaper business loan facility, or using the equity in your property to clear it altogether, can save business owners tens of thousands of dollars over the life of the debt and take a repayment structure that's actively working against the business and turn it into one that isn't.
Here are the five things worth getting right before you go ahead.
1. Don't rely on your bank, get a specialist involved
Walk into your own bank, or any major bank, and ask them to help refinance high interest business debt into your home loan, and there's a good chance they'll want a level of documentation and a clean track record that a lot of business owners simply don't have at the point they're looking to consolidate. This isn't a gap in their service, it's simply not within the risk appetite of most major banks, which is why this is genuinely specialist territory. A lot of the business owners we work with on this have already been declined once, sometimes more than once, after approaching their bank directly first. Each of those declines adds another credit inquiry to their file, which costs them time they didn't have to lose, and only makes their situation worse.
2. Understand your exit strategy before you consolidate
Consolidating your business debt doesn't make it disappear. It restructures it into a cheaper loan product with lower repayments and a much lower interest rate. But the underlying debt is still there, and it still has to be repaid in full. This is important because business debt consolidation only makes sense as a reset if your business has been through a tough period and has now turned a corner and you can see it improving from here, or you're still in a tough period but you can see light at the end of the tunnel and business performance will pick up once the pressure of daily high interest repayments is gone.
When does business debt consolidation make sense?
Your business took on expensive short term finance to get through a specific situation, a slow season, a big order that needed upfront stock, a client who paid late, and it has genuinely turned a corner, or you can already see the light at the end of the tunnel. Consolidating removes the daily repayment pressure and gives you the clean slate to build on that.
When does business debt consolidation not make sense?
You don't see your business performance meaningfully improving, and you don't see yourself being operational in the near future. In that case, restructuring the debt into your mortgage risks just prolonging the pain rather than actually solving anything, and it's worth having an honest conversation about whether a different path makes more sense for your situation.
3. Keep the business debt on its own loan split
Say you owe $600,000 on your existing mortgage and you want to use $200,000 of equity to clear a high interest business loan. It's tempting to just increase your loan to $800,000 and move on, but it's worth resisting that instinct and creating a brand new $200,000 split specifically for the business debt instead, sitting alongside your original $600,000 split rather than blended into it. Keeping it separate means the debt stays visible as its own specific, trackable goal that you can actively pay down, rather than disappearing into a much larger balance you're not really thinking about day to day, and it also means a lender or your accountant can trace exactly what that portion of the loan was used for, which matters if deductibility ever comes into the conversation.
4. Don't take 30 years to pay it off
Business loans and unsecured facilities are usually structured to be repaid within a year or two, so it's easy to assume rolling that same amount into a 30 year mortgage is a straightforward win. It usually is, given the rate difference, but even at a dramatically lower interest rate you can end up paying more in total interest over the life of the loan if you just let it sit at the minimum repayment. The way around this is to treat that separate split as its own short term goal and direct whatever extra cash flow you can toward it over the next couple of years, so you get the benefit of the lower rate without accidentally stretching the debt out over decades.
5. Fix what actually caused it, not just the symptom
Consolidating clears the debt, but it doesn't fix whatever caused the business to need expensive short term finance in the first place, and that's worth being honest with yourself about before you go ahead. If it came from a genuine one off event, a big opportunity that needed fast capital, a client who paid late, an unexpected cost, then consolidating is a clean reset and that's the end of it. But if it built up because cash flow simply wasn't being managed with enough of a buffer, putting a proper system in place going forward matters just as much as clearing the current balance, whether that's building a cash reserve, tightening payment terms with clients, or working more closely with your accountant on cash flow forecasting rather than reacting to gaps as they appear.
How we help
We know which lenders on our panel genuinely have appetite for this kind of business debt consolidation, and which ones don't, so you're not adding another decline to your file by applying with someone who was never going to approve it in the first place. We'll also have an honest conversation with you about whether this is genuinely the right time for your business, and what's actually changed to stop the same pressure building up again, because getting you approved is only half the job, making sure you're actually better off doing it is the part that matters most.
This page provides general information only and does not take into account your personal financial situation. It is not tax, legal, or financial advice. Always seek advice from a qualified accountant about your specific circumstances.
Useful tools and resources
Explore our Debt Consolidation service, or try our free Refinance Feasibility Calculator to see what consolidating could mean for your repayments.
