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How to get a second mortgage in Australia
To get a second mortgage in Australia you need enough equity above your first mortgage, a combined LVR inside the lender's ceiling, usually 80%, a credible exit, and your first mortgagee's consent to register a second interest on the title. For business-purpose lending, income is generally not assessed.
Thrift Private · Updated 12 October 2026
That last point is the one that surprises people who have only ever borrowed from a bank. What follows is each requirement in order, what actually slows a second mortgage down, and what it costs.
What a second mortgage is
A second mortgage is a loan secured by a property that already has a mortgage on it. Your existing lender keeps first position on the title. The new lender registers in second position behind them, which means that in a sale or a default, the first mortgage is repaid in full before the second lender receives anything.
That subordinate position is why second mortgages are priced above first mortgages. The lender is taking the riskier slice of the same security.
The advantage is that it leaves your first mortgage alone. If you are holding a rate you could not replace today, or a fixed loan with a break cost, refinancing to release equity can be the more expensive path even at a lower headline rate. A second mortgage gets you the money without touching the facility underneath it.
The three things a lender checks
Nearly every second mortgage decision comes down to these, in this order.
- The security. What the property is worth, where it is, and what condition it is in. Residential, commercial, industrial, retail and development sites are all acceptable across our panel, but appetite differs sharply by asset class and location.
- The combined position. The first mortgage plus the proposed second, measured against the valuation. Up to 80% combined on standard security, lower for specialised, regional or partly tenanted property.
- The exit. How the loan gets repaid: a refinance to a bank facility, a sale, a settlement, a project completion. Expect to evidence it with a contract, a term sheet, a sales campaign or a presale schedule. A clear exit is the strongest thing in an application and the fastest route to a sharper rate.
What is generally not required for business-purpose lending: servicing calculators, two years of tax returns, minimum credit scores. Defaults, ATO debt and a short trading history are not automatic declines with private funders. They are priced.
One distinction worth being precise about. Where the borrowing is genuinely for business or investment purposes, this sits outside consumer credit regulation. A second mortgage taken for personal or domestic purposes is regulated consumer credit and is assessed quite differently, including on your capacity to repay. If your purpose is personal, tell your broker at the first call, because it changes which lenders can help at all.
How much equity can you release?
Take the property value, multiply by the lender's maximum combined LVR, then subtract the balance of your first mortgage. What remains is the headroom.
On a property worth $1.2m with a $700,000 first mortgage, at 80% combined the ceiling is $960,000, so roughly $260,000 is available.
The most common misunderstanding in a first call is quoting the size of the second mortgage against the value of the property. A $200,000 loan on a $1.2m house sounds like 17%, which sounds like nothing. The lender does not see it that way, because the first mortgage is repaid ahead of them. That loan is a 75% combined position, and 75% is what gets assessed and priced.
It also explains why the valuation moves the answer so much more than the size of the second loan does. A valuation landing five per cent below expectation removes $60,000 of headroom on a property at that price, before anyone has discussed a rate.
Our second mortgage calculator does this arithmetic, including whether the amount you need fits inside the ceiling.
First mortgagee consent, the usual bottleneck
This is the part no comparison site explains, and it is the single biggest determinant of whether a second mortgage lands on time.
To register a second mortgage, your first mortgagee has to sign a deed of priority. It is the document that fixes how much debt ranks ahead of the second lender, so that the second lender knows exactly what sits in front of them. Without it, the second mortgage cannot be registered.
Getting that signature is outside your control and outside your broker's. Some lenders handle it as routine administration. Others treat it as a credit decision and take considerably longer. A few will not provide it at all.
Two practical consequences:
Start the consent request early. It should be running in parallel with the valuation, not after it.
If consent will not come, or will not come in time, a caveat is the usual workaround, because it does not require the first mortgagee to sign anything. It is weaker security and costs more, which is covered further down.
What you need to provide
Less than a bank would ask for, and the list is short:
- Details of the property offered as security, including the address and a recent rates notice
- Your current mortgage statement, showing the balance and the lender
- Identification
- What the funds are for, and how the loan will be repaid
- Evidence supporting the exit: the contract, term sheet, sales campaign or presale schedule
The document most often missing at first submission is the evidence for the exit. Borrowers arrive with the property details and the amount, and describe the repayment plan verbally. A lender cannot price an exit it cannot see, so an application without it sits still.
How long it takes
Indicative terms the same day, where we have the security, the amount and the exit. That part is quick because it is a matter of knowing which funders are writing this shape of deal currently.
Settlement is the longer half, and the timeline is set by two things: the valuation and the deed of priority. A registered second mortgage moves at the speed of the slower of those. Where the first mortgagee is quick, the deal follows the valuation. Where it is not, the consent governs everything.
If the deadline is fixed and the consent looks slow, that is the conversation to have at the start rather than in week three.
What it costs, and the honest trade-off
Private lending across our panel starts from 7.99% p.a. with establishment fees from 0.75%, indicative only and subject to lender assessment, the security type, LVR and the strength of the exit. A second mortgage sits above a first mortgage on price and below a caveat facility.
Judge it in dollars over the real term, not by the annual rate. Ask for the total cost at the expected payout date, including establishment, legals, valuation and any capitalised interest, and ask what that becomes if the exit runs a month late.
The trade-off is worth stating plainly. Private lending costs more than a bank facility. It is a tool for a defined window: a settlement, a construction period, a sale campaign, a turnaround. The right comparison is not "second mortgage rate versus bank rate", it is the cost of the facility against the cost of not doing the deal. Over the right six or twelve months that maths is usually easy. As permanent funding it is not.
When a caveat is the better answer
Same equity, same combined LVR ceiling, different instrument.
| Second mortgage | Caveat loan | |
|---|---|---|
| First mortgagee consent | Required | Not required |
| Typical settlement | Gated by that consent | From 2 business days |
| Cost | Lower | Higher |
| Typical term | Longer | Shorter |
| Security strength | Registered, stronger | Noted on title, weaker |
Tell us the security, the amount and the exit. We will tell you which lenders on our panel are writing this shape of deal now, and come back with indicative terms the same day. No credit check to enquire. See our second mortgage facilities or call 0478 715 429.
Get indicative termsIf your timeline has room in it, the registered second mortgage is almost always the better economics. If it does not, a caveat exists for exactly that reason. It is a tool for a deadline, not a default choice.
FAQ
Frequently asked questions
How can I get a second mortgage?
You need enough equity in the property, a combined LVR within the lender's limit, up to 80% across our panel, a credible repayment plan, and your first mortgagee's consent to register a second interest on the title. For business-purpose loans, servicing income is generally not assessed.
Can I get a second mortgage if the bank said no?
Often, yes. Private and non-bank lenders assess the security and the exit rather than a servicing calculator, so a decline based on serviceability, trading history or a credit event does not carry across. The question becomes whether the equity and the repayment plan hold up.
How is combined LVR calculated?
The balance of the first mortgage plus the proposed second mortgage, divided by the value of the property. A $1.2m property with a $700,000 first mortgage and a $200,000 second sits at 75%.
Do I need my first mortgagee's permission?
For a registered second mortgage, yes. They sign a deed of priority setting out how much debt ranks ahead of the second lender. It is the usual bottleneck on timing. Where consent cannot be obtained in time, a caveat is the common alternative.
Is my income assessed?
For business-purpose lending secured by property, generally not in the way a bank assesses it. Tax returns and minimum credit scores are usually not required. Second mortgages taken for personal or domestic purposes are regulated consumer credit and are assessed differently, including on capacity to repay.
What can a second mortgage be used for?
ATO debt, working capital, business expansion or acquisition, equipment purchase, debt consolidation, settlement shortfalls, renovation and development costs, investment capital, and deposits on a further purchase are all common. Because assessment rests on the security and the exit, the range is far wider than a bank's.
How much can I borrow?
From $200,000, up to 80% of the property's value on a combined basis, less whatever your first mortgage balance is. The calculator will give you the headroom on your own numbers.
What if my combined LVR is above 80%?
The options are a higher valuation if the property has been under-assessed, a smaller loan, additional security over another property, or refinancing the first mortgage to release equity in a single facility rather than two.
Have a deal rather than a question?
Indicative terms the same day. No credit check to get a quote.