Second mortgages
A second mortgage lets you borrow against the equity in a property without touching your existing first mortgage. We arrange them for business purposes only, such as funding a business, clearing tax debt or bridging a short term gap.
Common uses
Business funding
Working capital, stock or growth funding secured by property you already own.
Tax debt
Clear an ATO debt while a longer term plan is put in place. ATO debt refinancing →
Business or commercial purchases
Fund a deposit or settlement on a business or commercial property when timing is tight.
Keeping your first mortgage
Leave a low rate or fixed rate first mortgage in place while you access equity.
How a credit team reads a second mortgage
A second mortgage lender ranks behind your first lender. If the property is ever sold they're paid second so credit looks hard at the equity left over and at how the loan will be repaid.
Equity after the first mortgage
Lenders take the property's value and subtract what's owed on the first mortgage. Most set a maximum combined LVR across both loans so a buffer remains.
The property
Location, type and condition all matter. Well located residential and standard commercial property suits more lenders than specialised or regional security.
The first lender
Some first mortgages need the lender's consent before another mortgage can be registered. Some second mortgage lenders rely on a caveat instead. Credit will check which applies early on.
Business purpose
These loans are for business purposes only. Credit will ask what the funds are for and will usually want a signed declaration confirming it.
The exit
Second mortgages are usually short term. Lenders want a clear plan for repaying the loan such as a sale, a refinance or business income. A vague exit is one of the main reasons these loans get declined.
The cost
Rates and fees are higher than a first mortgage because the risk is higher. Some loans let you prepay or capitalise the interest, so there are no monthly repayments during the term. We'll compare that cost against refinancing both loans into one so you can see which works out better.
Four steps, one point of contact
Tell us the plan
What you are trying to do and the approximate amount.
Get a straight answer
Whether it is fundable and which lenders suit it.
Compare the options
Rates, structure, fees and conditions side by side.
Through to settlement
Application prepared, submitted and managed.
Why second mortgages get declined and what to fix first
From the credit side most second mortgage declines come down to the equity, the exit or the paperwork.
- Not enough equity
If the combined LVR is too high the loan won't fit. Getting a sense of the property's value early saves a wasted application.
- No clear exit
Have the repayment plan worked out and ready to explain before you apply.
- Arrears on the first mortgage
Missed payments on your existing loan are a serious concern for a second lender. Bring the account up to date first if you can.
- First lender consent left too late
Find out early whether your first lender needs to consent. Leaving it late can hold up settlement or risk the deal being declined.
- Mixed purposes
The funds need to be for business purposes. If part of the money is for personal use the loan may be declined or require a different structure.
What is a second mortgage?
It's a second loan secured against a property that already has a mortgage. It sits behind the first loan and your first mortgage stays in place. Most second mortgages come from non-bank lenders and private credit funds.
Can I get a second mortgage for personal use?
We arrange second mortgages for business purposes only. If you need funds for personal reasons we can look at other options such as refinancing. Cash out / equity release →
How much can I borrow?
It depends on the property's value, what you owe the first mortgagee and the lender's maximum combined LVR. We'll work it out with you before you apply.
How long do second mortgages run for?
Most are short term and are designed to be repaid or refinanced once the purpose is achieved. Terms vary by lender but can range from 3 to 36 months. Longer terms of 3 years or more are possible so speak to us to get a better understanding of your situation.
Is a second mortgage better than refinancing?
Sometimes. If your first mortgage has a low or fixed rate then keeping it and adding a short second mortgage can cost less overall. If it doesn't, refinancing both into one loan is often the lower cost option. We'll compare both for you.
Tell us what you need.
No documents needed to start. Call (02) 7822 0255 or 0481 877 727, or answer a few quick questions.