Quick answer: Potentially. A borrower may be able to keep an existing first mortgage in place and raise separate business-purpose finance secured against the same property, but this depends on the existing lender's documents, the proposed lender's security position, total LVR, consent or priority requirements and the economics of the transaction.
Property-security filter: This page is about business-purpose finance backed by Australian real property. If there is no suitable property available as security, this particular funding pathway will generally not apply.
Questions behind this page
- Can another lender take a second mortgage behind my bank?
- Do I need to refinance my existing mortgage to use the equity?
Refinancing is not the only possible structure
One option is to refinance the existing debt and new business funding into a new first mortgage. Another is to leave the existing first mortgage in place and add a separate second-ranking facility.
Why someone may want to keep the first loan
The existing mortgage may have attractive pricing, fixed-rate terms, offset arrangements or other features the borrower does not want to disturb.
Why a second mortgage can be harder
The new lender ranks behind the first mortgagee. That can mean higher pricing, additional legal documentation, tighter leverage and first-lender restrictions or consent requirements.
Compare total cost, not just rate
Keeping a cheap first mortgage and adding expensive junior debt is not automatically better than refinancing everything. Compare the whole structure, including fees, break costs, term and exit.
What GPS Finance needs to test a scenario
- Australian property offered as security
- estimated property value and current secured debt
- amount required and business purpose
- whether the proposed facility is first or second ranking
- required timeframe
- proposed exit or repayment strategy
Ask GPS to review a property-backed business scenario.
Related guides
- Property-backed business finance
- Second mortgage business finance
- Bank funding shortfall
- Short-term property-backed finance
Sources and verification
General information only. Business-purpose property-backed lending, private lending, first and second mortgage availability, valuation, pricing, fees, security priority, consent requirements and exit criteria vary by lender and transaction. This is not legal, tax, accounting or personal financial advice.
Need help matching this to a business-finance option?
GPS Finance can review the funding purpose, conduct, documents and lender fit before you make a formal enquiry.
