Second mortgage business loans: use your equity without touching your home loan

Your home or investment property may be quietly holding hundreds of thousands of dollars in equity. A second mortgage business loan puts that equity to work for your business, without refinancing the home loan you already have.

How a second mortgage business loan works

You keep your existing mortgage with your bank, at the same rate and the same repayments. The business loan is registered as a second mortgage over the same property, sitting behind the bank. If you ever sell or refinance, the bank is paid first and the second mortgage after it.

Because the bank loan isn’t touched:

• There are no break costs on a fixed rate
• You don’t have to go through a full bank refinance
• The deal can move at private-lender speed, not bank speed

How much can you borrow?

From $20k to $5 million, depending on the available equity. As a simple example, a property worth around $1.2m with $500k owing on the first mortgage has substantial equity sitting behind the bank. A lending manager will look at the property, what’s owed and what the money is for, and give you an indicative answer on the first call.

No formal valuation is needed before approval. The rates notice, your latest mortgage statement and a sensible idea of what the property is worth are enough to get started.

Second mortgage or caveat?

They do the same job in different ways. In most states, a private business loan can be secured quickly with a caveat. In New South Wales and Queensland, a registered second mortgage is used instead. A caveat can also be converted to a registered second mortgage later on.

You don’t need to work out which one applies. Your lending manager does that for you.

What it’s used for

• Clearing ATO debt and getting off a payment plan
• Working capital for growth, a big contract or a seasonal stock build
• Buying equipment, vehicles or another business
• Paying out expensive cash-flow loans with daily or weekly repayments
• Bridging until a bank refinance or a property sale settles

Terms built for business owners

• No repayments for up to 6 months. Interest can be added to the loan, or prepaid if you prefer.
• Repay early at any time. Pay it out when the bank refinance or sale comes through.
• Extend if you need longer, without penalties.
• Funds in as little as 24 hours once the documents are signed.

What to have ready

1. Photo ID for every owner of the property
2. The latest council rates notice
3. Your latest mortgage statement for the first mortgage
4. A few lines on what the money is for and how it will be repaid

That’s enough for a conditional approval. Our property documents checklist shows where to find each one tonight.

A worked example

A builder in Brisbane has a home worth around $1.4m with $600k owing to the bank. A developer client is 90 days late paying a $350k progress claim, and the builder needs $300k to pay subcontractors and suppliers this week.

The bank won’t move quickly, and a cash flow lender offers far less than the amount needed because turnover has dipped while the claim is outstanding. A second mortgage business loan of $300k sits behind the existing home loan, with no repayments for the first 6 months. When the progress claim is paid, the builder repays the loan early, with no penalty.

Every situation is different, but the pattern is common: real equity, a short-term gap and a clear way out.

Common questions about the process

Does the bank need to know? Some first mortgages require the bank’s consent to a second mortgage. Your lending manager will check your situation on the first call.

What if the property is in my spouse’s name too? Every registered owner needs to sign. That’s normal, and it’s worth letting them know early.

Can the property be commercial? Yes. Shops, offices, warehouses and factories can all be used as security, as well as homes and investment properties.

When you’re ready, send your enquiry. It takes about 60 seconds and there’s no credit check to enquire.

Why speed matters with a second mortgage

The gap between needing money and getting it is where businesses lose deals, discounts and staff. A supplier offering a discount for upfront payment, an auction with a short settlement, a tax debt approaching enforcement: each has a deadline. Because there’s no valuation to wait for and your existing loan doesn’t need to be refinanced, a second mortgage business loan can be approved within the hour and funded in as little as 24 hours once the documents are signed. That speed is often worth more than the loan itself.

After the loan settles

Most owners repay a second mortgage business loan from one of three places: a refinance with their bank once the business’s numbers support a bigger loan, the sale of a property, or the money the loan helped to earn, such as a completed contract. Whichever it is, you can repay early at any time.