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Private finance

Second mortgages: raising money without touching the first loan

A second mortgage sits behind your existing lender on the same property. It is the usual way to raise money when refinancing the whole loan would be slow, expensive, or simply not possible. Here is how it is structured, who consents to what, and when it is the right move.

By Joshua James, Ace Lending Solutions. Updated 26 October 2026. Figures checked against the sources listed below.

How it works

Your first lender holds a registered first mortgage. A second mortgage is registered behind it, so if the property is ever sold under enforcement the first lender is repaid first and the second lender takes what is left. That ranking is the whole story: it sets the price, the size and the conditions.

Because the second lender is exposed to whatever is left, they measure everything secured against the property, not just their own loan. The combined total against the value is the number that decides the deal.

Most first mortgage contracts require the lender's consent before another interest is granted. In practice the two lenders sign a deed of priority that caps how much the first mortgage can grow to and sets out what happens on default. Getting that signed is usually what decides the timetable, so it is the first thing to start, not the last.

When a second beats a refinance

What funders look at

  1. The equity underneath. Value today, less everything secured ahead of them.
  2. The first lender's position. Balance, limit, whether it is on interest only, and whether consent is achievable.
  3. The exit. Sale, refinance, project completion or a receivable, with a date.
  4. Purpose and borrower. Business or investment purpose, who the borrower is, and who would guarantee it.
Private lending for business or investment is unregulated

Most private lending is for a business or investment purpose, which sits outside the National Credit Code. That is part of why it moves fast. It also means the consumer protections attached to a regulated home loan do not apply: the loan is short, the cost is higher, default interest can be steep, and the security can be enforced quickly. Read the terms, take legal advice, and be sure of your exit before you sign.

What it costs

More than a first mortgage, because the lender is behind someone else, and generally less than a caveat loan, because the security is properly registered and the term is longer. Expect an establishment fee, legal costs for both lenders, a valuation, and interest charged monthly or capitalised. Factor in the cost of the first lender's consent, which some charge for.

Common questions

Will my bank agree to a second mortgage?

Sometimes, and it depends on the bank, the amount, and the purpose. Where consent is unlikely, a caveat may be used instead, though that carries its own risk of breaching your loan terms. Joshua will be straight with you about which path your first lender is likely to accept.

How much can I raise on a second mortgage?

It comes down to the equity left after the first loan, the type and location of the property, and the exit. Funders look at the combined debt against the value rather than their own slice.

Is it cheaper than a caveat loan?

Usually, because the security is registered and the arrangements with the first lender are documented. The trade off is time: consent and documents take longer than lodging a caveat.

Can a second mortgage be used to buy a business or stock?

Yes, where the purpose is business or investment. Property secured funding is often the cheapest way to raise money for a business purpose, which is why it is worth checking before taking unsecured business debt.

Sources

General information only, not credit advice. It doesn’t take your objectives, financial situation or needs into account. Rules and figures change; check them, or talk to Joshua, before you rely on them.