Second mortgage
Access equity without touching your first mortgage.
A second loan that sits behind your existing mortgage, not in place of it. Suits a business owner releasing property equity for business capital.
You don’t pay to compare.
No credit file impact · No cost to compare · No obligation
Second mortgages at a glance
- Amount
- $50,000 to $5,000,000
- Term
- Typically 3 to 12 months
- Security
- A second charge, behind your existing first mortgage
- Your first mortgage
- Stays as it is, with your current lender
- How you pay
- Interest only or balloon, matched to your exit plan
Indicative, and subject to lender assessment. Your options are typically ready within 24 hours of receiving your documents.
Is it right for you?
When a second mortgage fits, and when it doesn’t.
Often fits
- Business capital from a property you already own
- Keeping your first mortgage, its rate and its lender as they are
- Avoiding the break costs of refinancing your first mortgage
- A short-term need with a clear exit or refinance plan
Usually not
- A long-term need, where refinancing your first mortgage may fit
- Funding without property security, where a business term loan may fit
Business funding, compared on real data, in three steps.
How It WorksCompared
A second mortgage or a refinance?
| Second mortgage | Refinancing your first mortgage | |
|---|---|---|
| Your first mortgage | Stays as it is, with your current lender | Replaced by the new loan |
| Security | Property, second charge | Property, first charge |
| Term | Typically 3 to 12 months | Typically 25 to 30 years |
| Repayments | Interest only or balloon | Principal and interest, or interest only |
| Rate | Higher than a first mortgage, as the lender is repaid second | Usually lower, with a first charge |
What it costs
How you pay, and what it costs.
- Repayments
- Interest only or balloon, typically over 3 to 12 months
- Rate
- Higher than a first mortgage; shown for each option in your report, with the APR beside it
- Fees
- Establishment, valuation and legal fees can apply; your report shows them side by side
Who qualifies
What lenders look for.
Typical criteria, and subject to lender assessment.
- Equity
- Typically at least 25% left after both mortgages
- Valuation
- Most lenders require a property valuation, which can add upfront costs
- Exit plan
- A clear exit or refinance plan, as terms are typically 3 to 12 months
- Your first lender
- Some must consent before a second mortgage is registered, depending on your loan’s terms
- Property
- Residential, commercial and rural property can be considered
Repayment calculator
Estimate your repayments.
Principal and interest, or interest only, over 3 to 12 months. Move the slider for an indicative repayment, total repaid and total interest.
- Rates shown are simple p.a.; your report shows the APR.
- Results are approximate and exclude lender fees. Not an offer of credit.
- Monthly repayment (P&I)
- $44,659/mo
- Total repaid
- $535,904
- Total interest
- $35,904
Illustrative only. Uses an assumed 13% p.a. rate for a specialist second mortgage over a term of up to 12 months, and leaves out fees and charges, so it is not a quote or a comparison rate. Your Compare Report shows the rate and term each lender offers, based on your equity and how you plan to repay.
Questions about second mortgages.
What is a second mortgage?
A loan secured against a property you already have a first mortgage on. It sits behind your existing mortgage, not in place of it, and the second lender is repaid after the first. Your first mortgage and current lender stay as they are.
What can the funds be used for?
Business purposes, such as cash flow, resolving a tax debt, buying a business, development finance or renovating a property.
Will my first lender need to agree?
It depends on your existing loan’s terms: some first lenders must consent before a second mortgage is registered. Each case is considered against your existing loan terms and total equity position.
How much equity do I need?
Typically at least 25% left after both mortgages. For example, on a property worth $1,000,000 with a $500,000 first mortgage, you have $500,000 of equity, and a second mortgage of up to $250,000 may be possible, subject to lender assessment.
Is the calculator’s rate an offer?
No. The calculator uses an assumed 13% p.a. over a term of up to 12 months and leaves out fees and charges, so it is illustrative only, not a quote or a comparison rate.
How do we get paid?
Comparing costs you nothing. Not comparing can cost you plenty.
The headline rate rarely tells the whole story. Fees, charges and loan terms can add far more to what you repay. That’s why your Compare Report shows every cost we can identify side by side.
In most cases, the lender pays us, and only if you decide to proceed with their product offer. For more complex deals, or where the lender pays us little or nothing, we may charge a fee for our service. It doesn’t happen often, but when it does, it’s shown on your Compare Report and we’ll walk you through it before you decide.
No obligation to proceed, ever.
Related
Read more, or compare a different product.
See your options, side by side.
No credit file impact · No cost to compare · No obligation
Or talk to us: 1300 161 641 · support@tradefunding.com.au