Glossary
Security property
Also called: security, collateral
Security property is the real estate a lender takes a mortgage or caveat over to secure a loan. It may be the property being bought or developed, or another property the borrower or a third party owns.
An example
A borrower buying a commercial unit offers both the unit and their existing home as security, because the lender will not advance enough against the unit alone.
Why it matters
The type, location, condition and saleability of the security shape what a lender will offer. Specialised or regional property may be valued more conservatively. Offering additional security increases what is at risk if the loan is not repaid.
Points to check
Check which properties the lender will take as security and whether third-party properties are included. Ask what the lender needs to release a property, such as a partial repayment or revaluation. Make sure all owners of a security property understand the risk and receive separate advice where appropriate. Keep insurance current, because lenders usually require it as a condition of the loan.