Second mortgage loans are a flexible finance solution that allow property owners, investors and business operators to access the equity in their property while keeping their existing first mortgage in place. A second mortgage loan is secured behind the first mortgage and is commonly used when borrowers require fast access to capital for commercial or business purposes. Many businesses use second mortgage finance when banks decline an application or when traditional lenders cannot provide funds quickly enough. Because the loan is secured against property, a private second mortgage lender can often approve and settle loans much faster than banks. Second mortgage loans can be secured against residential, commercial, industrial or investment properiesnand are commonly used for business expansion, working capital, property settlements, development costs or short-term investment opportunities. For borrowers needing short-term property finance, a second mortgage can provide fast access to funds while maintaining existing bank facilities. Prime Finance provides second mortgage loans in Australia designed for business owners, property investors and developers who require reliable short-term funding secured by property.
Residential Property, Bridging Loan, Business Loan & Commercial Loan |
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Locations |
Australia wide | ||||||||
LVR |
Major Cities: Up to 80.00% LVR Regional Cities: Up to 75.00% LVR Rural / Destination: 70.00% LVR Loan value to be inclusive of all capitalised interest and fees incurred during the loan period. |
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Interest Rates |
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Upfront Fees |
Legal and valuation fee only | ||||||||
Default Fees |
5% p.m. | ||||||||
Terms |
Minimum 1 month to 1 year * Where minimum of 1 month to 1 year can agree to a shorter term |
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Amount |
$50k - $500k | ||||||||
Security |
2nd Mortgage | ||||||||
Exit Strategy |
Each loan on its merits | ||||||||
Valuation Methodology |
All valuations must be on an 'as is basis' where the residual land value relating to a development scheme is ignored. | ||||||||
Residential Property $0.5m - $20m |
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Locations |
Major Cities: Sydney (50kms), Melbourne (35kms), Brisbane (20kms), Gold Coast (20kms), Canberra (10kms) Regional Cities: Newcastle, Wollongong, Geelong, Central Coast (NSW) Destination: Byron Bay, Southern Highlands, Mornington Peninsula, Noosa Note: Regions / suburbs other than the above to be considered on a case-by-case basis |
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LVR |
Major Cities: Up to 75.00% LVR Regional Cities: Up to 65.00% LVR Rural / Destination: 55.00% LVR Loan value to be inclusive of all capitalised interest and fees incurred during the loan period. |
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Interest Rates |
RBA Cash Rate Floor to be 3.60% |
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Default Fees |
0.05% p.m. to be deducted from the Manager's Default Management Fee | ||||||||||||||
Terms |
Minimum 6 months* * Where minimum of 6 months is not achievable, Prime finance can agree to a shorter term where Prime finance is granted 1.5% of upfront fee (on a pro rata basis relative to invested amount). |
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Amount |
$0.5m - $20m | ||||||||||||||
Security |
2nd Mortgage First or second ranking PPSR / GSD over the Borrower Specific Security Deed over shares of the borrower (where relevant) Personal Guarantee Any other security reasonably required by the investor. |
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Exit Strategy |
An exit must be specified. Exit type requiring discussion to include:
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Senior Lender Profile |
Senior lender / 1st Mortgagee must be either a bank / ADI or bank / ADI like lender in terms of interest, fees & covenants (e.g. Pepper, Resimac, Liberty etc.) | ||||||||||||||
Valuation Methodology |
All valuations must be on an 'as is basis' where the residual land value relating to a development scheme is ignored. | ||||||||||||||
Strata or Company Title |
Where a property is strata or company title:
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Commercial, Industrial, Retail $1m - $5m |
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Locations |
Major Cities: Sydney (50kms), Melbourne (35kms), Brisbane (20kms), Gold Coast (20kms), Canberra (10kms) Regional Cities: Newcastle, Wollongong, Geelong, Central Coast (NSW) Destination: Byron Bay, Southern Highlands, Mornington Peninsula, Noosa Note: Regions / suburbs other than the above to be considered on a case-by-case basis |
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Other |
Properties must be leased to an unrelated third party of suitable quality. Where leased to a related party, criticality of the property to ongoing operations must be evident alongside verification of solvency of lessee. |
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LVR |
Major Cities: Up to 65.00% LVR* Regional Cities: Up to 50.00% LVR Loan value to be inclusive of all capitalised interest and fees incurred during the loan period. Minimum capitalisation rate accepted on Valuation to be a minimum of 6.25% for Commercial and Retail, 5.50% for Industrial |
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Interest Rates |
RBA Cash Rate Floor to be 3.60% |
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Default Fees |
0.05% p.m. to be deducted from the Manager's Default Management Fee | ||||||||||
Terms |
Minimum 6 months* * Where minimum of 6 months is not achievable, Prime finance can agree to a shorter term where Prime finance is granted 1.5% of upfront fee (on a pro rata basis relative to invested amount). |
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Amount |
$1m - $5m | ||||||||||
Security |
2nd mortgage First or second ranking PPSR / GSD over the Borrower Specific Security Deed over shares of the borrower (where relevant) Personal Guarantee Any other security reasonably required by the investor. |
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Exit Strategy |
An exit must be specified. Exit type requiring discussion to include:
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Senior Lender Profile |
Senior lender / 1st Mortgagee must be either a bank / ADI or bank / ADI like lender in terms of interest, fees & covenants (e.g. Pepper, Resimac, Liberty etc.) | ||||||||||
Valuation Methodology |
All valuations must be on an 'as is Basis' where the residual land value relating to a development scheme is ignored. The Investor may choose to accept a valuation on an 'as-is site related valuation' on a case-by-case basis. Minimum capitalisation rate accepted on Valuation to be a minimum of:
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A second mortgage loan is a loan secured against a property that already has a first mortgage registered by another lender. The second lender registers their mortgage behind the first mortgage, allowing the borrower to access additional equity from the property.
Second mortgage loans are commonly used by business owners, property investors, developers, and commercial borrowers who require quick access to funds for business or investment purposes.
Second mortgage finance is often used for:
Business cash flow
Commercial opportunities
Property development projects
Property settlements
Tax debt payments
Investment opportunities
Bridging finance between transactions
A private second mortgage lender can often approve loans quickly with settlements sometimes occurring within a few days depending on the valuation and documentation required.
Second mortgage loans can be secured against:
Residential property
Commercial property
Industrial property
Investment property
Development sites
Most traditional banks rarely provide second mortgage loans for short-term funding. As a result, borrowers often work with private lenders that specialise in second mortgage finance.
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