Chattel Mortgage

What is chattel mortgage finance?

Chattel mortgage finance is a commercial finance product that enables a financier to lend money to your business to purchase energy efficiency equipment (chattel). You repay the loan via regular instalments. You own the equipment at the time of purchase, while the financier takes a mortgage over the equipment. Once the final instalment has been paid to the financier, the equipment’s asset title is transferred to the customer.

How can chattel mortgage finance help your energy efficiency project?

No upfront capital or security
Chattel mortgage loans may enable a business to undertake energy efficiency upgrades without having to find up-front capital or security.

Realising savings now
Businesses that use finance for their energy efficiency projects can realise immediate cash flow benefits. Energy efficiency projects can result in higher savings than loan costs.

Tax and accounting
As the business owns the asset, the business may be able to claim depreciation of the asset. As the business pays interest on the debt, the interest may be deductable at the company tax rate. Seek specific tax and accounting advice for your particular situation.

Things to consider

Project risk
As the business is considered the owner of the asset, the business bears the risk associated with owning the asset. To secure the loan, the financier may seek security of existing business assets.

What are the steps to getting a chattel mortgage?

  1. Undertake an energy audit: This will help your business identify actions that will improve energy efficiency and reduce operating costs. Work with your energy assessor to determine the likely energy (kWh/MJ) savings per year for each recommended action.
  2. Seek quotes: Seek quotes from qualified contractors for actions recommended in the energy audit.
  3. Identify annual cost savings: Once the energy savings have been identified, calculate cost savings, taking into account consumption and demand charges. This allows you to determine the expected annual cost savings.
  4. Calculate finance terms: Understand the length, repayment frequency and expected interest rate of capital lease finance. This will help you forecast finance costs and determine if the savings of the project are equal to or exceed the finance costs.
  5. Determine tax treatment: Discuss how to depreciate your asset with your accountant to determine your after-tax position for the project.
  6. Seek finance quotes: Seek quotes from financiers, a link to some has been provided below. Understand term of the loan, requirements for capital or security, requirements to disclose your business’s financial statements, interest rates, the minimum and maximum loans and repayment frequency.
  7. Apply for chattel mortgage: Arrange for finance quotes and select a preferred financier. Secure the finance and arrange the contractor.

Finance and Government Subsidies

Businesses can also receive a discount on energy efficient products that are installed by accredited Victorian Energy Upgrade (VEU) providers. A list of these products and providers can be found on the ESI website.

Visit for more information.

Chattel mortgage financiers

The Clean Energy Finance Corporation (CEFC) has developed chattel mortgage finance offering with co-financiers, which specifically targets the energy efficiency needs of small business, manufacturers, the agricultural sector and small-scale commercial property.

The chattel mortgage loan identifies new technologies that meet the CEFC’s investment guidelines and offers a capital lease with 0.7% discount comparable to standard chattel mortgage products. This program is offered by This program is offered by a range of financiers. Visit for more information.

Download the Chattel Mortgage factsheet

Want to know more? Get in touch with:

Vivek Kotak

Sustainable Finance Lead

+61 3 8626 8781

Correct as at January 2018.

Sustainability Victoria
Level 28, Urban Workshop,
50 Lonsdale Street, Melbourne VIC 3000
Phone (03) 8626 8700
Published by Sustainability Victoria.
Sustainable Finance – Chattel Mortgage
© Sustainability Victoria January 2018

Disclaimer: The information provided in this document is general advice only. It does not take into account your particular needs or objectives and does not constitute legal or accounting advice. Accordingly, any comments or statements made are not a recommendation that a particular course of action is suitable for you and you need to seek your own legal, tax and accounting advice in relation to your specific circumstances.

This information is true and correct as of January 2018