What is a second mortgage?
A second mortgage is a lien on a property which is subordinate to a more senior mortgage or loan. Called lien holders positioning the second mortgage falls behind the first mortgage. This means second mortgages are riskier for lenders and thus generally come with a higher interest rate than first mortgages.
A second mortgage can be structured as a fixed amount to be paid off in a sufficient time. A second mortgage taps into equity in your home, which is the market value of your home related to any loan balance. A second mortgage can be increased or decreased but ideally, a second mortgage should only be used for a short period of time 1-12 months.
Second mortgages offer lower interest rates than unsecured loans, securing the loan with your home helps you because it reduces the risk of the lender unlike unsecured business loans, such as credit cards, car loans, and personal loans etc. Second mortgage interest rates are commonly 1-2% a month.
For example, if you had a mortgage with NAB for $1 million dollars secured on your home or investment property and you then applied for a $500,000 loan with Prime finance, this would be set up as a 2nd mortgage/caveat behind the NAB loan at a LVR of 75%.
In the event that you didn’t pay back your Prime finance loan and the property was sold for $2 million dollars, NAB would be repaid in full 1 million dollars plus any costs and Prime finance would receive $500,000.00 plus there costs, and you the client would receive what was left over.
How much can I borrow?
- Most private lenders restrict your Loan to Value Ratio (LVR) to between 60-75% of the property value at Prime Finance we go to 80% LVR!
- Fast turnaround times
- Loan amount up to 80% of LVR
- Serviceability accountant’s letter
- Easy lending criteria, minimal application and non-time consuming, an experienced broker will make the Prime Finance application process run smoothly
Short term 2nd mortgage loan
Short term 2nd mortgage loans are no longer than a 12 month period or as short as one month. Prime Finance settles 2nd mortgages upon registration of a caveat allowing very fast settlement to occur. This allows your client to obtain very fast funding at the lowest interest rate. Business loans 1%, residential bridging loans 2% per month. Prime Finance can also assist you with refinancing your 2nd mortgage facility with our lowest interest in Australia, as we are the specialists in 2nd mortgage finance and you can rest easy knowing your finances are in the right hands.
2nd mortgages are great for alternative to mainstream lending so if you have been turned away from the banks or other lenders, call Prime Finance today.
Intermediate 2nd mortgage loan
Intermediate 2nd mortgage loans usually have a term to maturity of 1 – 3 years.
Alternatively, there are times when the existing mortgage is secured at a competitive rate and the borrower needs additional funds for business purposes; with a second mortgage offering a cheaper option than refinancing the entire facility.
Prime Finance have been the lenders in providing alternative options to the short term loan market for the last 16 years.
Prime Finance 2nd mortgage product guides business purpose
- Loans up to 1.5 million dollars
- LVR up to 80% of as is value (terms and conditions apply)
- 2nd mortgage loan rate is 1% per month
- Loan term is 1 month to 3 years
Prime Finance acceptable 2nd mortgage securities
- Residential properties in metropolitan areas
- Rural / Residential properties (population over 50,000)
- Commercial properties
- Industrial properties
- Vacant Land (in metropolitan areas only, LVR up to 75%)
- Development sites (subject to terms and conditions)
100 points of ID Requirements for Prime Finance Application
|Document Type||Point Value|
|Australian Student Photo ID Card issued by a tertiary education institution.||40|
|Pension or concession card||40|
|Name and address confirmed by current employer (within last 2 years)||35|
|Public Utilities record ( 1 only)||25|
|Financial Institution passbook, debit or credit card (1 only)||25|