Chattel Mortgages Explained


You have a great idea for a new product, something innovative and unique that no one else has ever come close to producing, yet if it existed you know that everyone would want to have one! You believe in this product with all your heart, but the problem is, you don’t have enough capital to purchase the industrial machinery necessary for its production.

If you try to sell the idea to an existing manufacturer they may squeeze you out and steal the idea for their own, something you simply can’t risk because your idea is that fantastic!

So, is there anything that can be done to solve your dilemma and get your factory up and running?

Fortunately, there is indeed a solution! The thing you need to do is acquire something called a chattel mortgage that can help you get your production process up and running even though you can’t finance it by yourself!


A chattel mortgage is a special loan intended for the purchase of moveable property, referred to as “chattel”, which includes things like vehicles and factory equipment. The chattel itself thus becomes your loan collateral and can be repossessed in the event of a default on the part of your business.

Let’s take a closer look at chattel loans and how they may give you the leg up that you need! Let’s examine some of the items that chattel loans are traditionally used for:

Manufactured Homes – These used to be called “trailers”, and more recently were known as “mobile homes”, but those terms accrued too much social baggage, so now the polite term is “manufactured home”.

These housing units have wheels, making them mobile, and thus the kind of property that a chattel loan can be applied to. These are some of the most popular items that people seek chattel loans for.

Modular Homes – Really quite similar to a manufactured home, the modular home is somewhat less mobile and is usually removed from its wheelbase to be situated on a permanent foundation. Chattel mortgages can still be applied, but modular homes are also eligible for financing with conventional mortgages thanks to their more stable, fixed positions.

Vehicles – Chattel loans can help you acquire a new automobile, especially when it is going to be used for business purposes, such as a delivery truck or a hotel bus.

Equipment – This is a very broad category of items eligible for chattel mortgage loans. Any kind of heavy construction equipment counts, as well as factory machinery, as long as it can still be considered movable once it has been installed. Farm equipment is a popular chattel loan recipient because one has the potential to plant a crop that will pay it off within a year of purchase!

Remember that any items you’re financing belong to your lender until you pay off a chattel mortgage, so if you default your lender can seize and repossess their property!

Chattel mortgages are popular in Australia, and the Department of Industry, Science and Resources website contains more useful information on the subject. Good luck with your new business, we hope this helps you make it happen!