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Second mortgage calculator
How much equity the property will release, what your combined LVR becomes, and whether the amount you need actually fits.
Our panel goes to 80% combined on standard security. Regional, specialised or partly tenanted property usually sits lower.
The number that decides it
Combined LVR, not second mortgage LVR
The most common misunderstanding in a first call is the borrower 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.
A second lender does not see it that way. In a sale, the first mortgage is repaid in full before the second lender receives a cent, so the only position that matters is the total debt against the title. That $200,000 sitting behind a $700,000 first mortgage is a 75% combined position, and it is 75% that gets assessed and priced.
This also explains why paying down the first mortgage, or a valuation that lands higher than expected, moves the answer so much more than the size of the second loan does. The headroom is the gap between the LVR ceiling and where the first mortgage already sits — and that gap is usually narrower than owners expect.
Second mortgage or caveat
Same equity, two ways to secure it
The calculator above applies equally to a registered second mortgage and a caveat loan, because both are constrained by the same combined LVR. What differs is speed and price.
A registered second mortgage requires the first mortgagee to sign a deed of priority. That consent is the usual bottleneck — some banks turn it around in days, others take weeks, and a few will not give it at all. In exchange you get the cheaper of the two options and a longer available term.
A caveat does not need the first mortgagee to sign anything, which is why it can settle in as little as two business days. The security is weaker from the lender's point of view, so it prices higher and runs shorter. It is a tool for a deadline, not a default choice.
If your timeline has room in it, the second mortgage is almost always the better economics. If it does not, the caveat exists for exactly that reason.
FAQ
Frequently asked questions
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%.
Lenders assess the combined figure rather than the second mortgage in isolation, because in a sale the first mortgage is repaid ahead of the second.
How much equity can I release?
Property value multiplied by the lender's maximum combined LVR, less the balance of the first mortgage. At 80% combined, a $1.2m property with a $700,000 first mortgage has roughly $260,000 of headroom.
Valuation is what settles it in practice, not the figure the owner has in mind. A valuation landing five per cent below expectation removes $60,000 of headroom on a property at that price.
Do I need the first mortgagee's consent?
For a registered second mortgage, yes. The first mortgagee signs a deed of priority setting out how much debt ranks ahead of the second lender. It is the usual bottleneck on timing.
Where consent will not be given, or cannot be obtained fast enough, a caveat is often the workaround, since it does not require the first mortgagee to sign.
Is a caveat loan cheaper?
Usually not. A caveat is weaker security than a registered second mortgage, so it is generally priced higher and written for shorter terms. What it buys is speed. Where time is not critical, a registered second mortgage is normally the cheaper answer.
What if my combined LVR is above the ceiling?
The options are a higher valuation if the property has been under-assessed, a smaller loan, additional security over another property, or a refinance of the first mortgage to release equity in one facility instead of two.
A second lender will not sit behind a first mortgage where the combined position leaves no equity buffer.
Is my income assessed?
For business-purpose lending secured by property, generally not in the way a bank assesses it. The loan is written against the security and the exit rather than a servicing calculator, so tax returns and minimum credit scores are usually not required.
What the lender is testing is how the loan gets repaid — the sale, refinance or settlement that clears it.
This calculator is a guide, not an offer. Actual lending depends on a valuation, the security type and location, the strength of your exit and each lender's own policy. Nothing here takes your objectives, financial situation or needs into account.
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