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Second Mortgage Business Loans in Australia
Access equity in your property to fund business growth.
- Unlock capital without refinancing your first mortgage
- Fast approvals through private lenders*
- 100% LVR second mortgages available*
- Term loans and lines of credit available
- Flexible short term funding for business needs
Get a Second Mortgage Business Loan with Dark Horse Financial
1
Contact Our Team
Fill out our online form to apply for a second mortgage business loan. We’ll get in touch with you fast to understand your situation and make a recommendation.
2
Submit Application
We’ll expertly handle your application from start to finish. Some lenders can approve second mortgage business loans in a matter of days.
3
Get Funded
Once approved, documentation is usually signed electronically, making settlement fast. Once settled, the lender disburses the amount to you.
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What is a second mortgage business loan?
A second mortgage business loan is a loan secured against a property that already has an existing mortgage. The second lender takes a secondary position behind the first lender on the property title.
This means the first lender has priority if the property is sold, and the second lender is repaid from any remaining funds. Because of this position, second mortgages carry higher risk and typically higher rates.
Business owners use second mortgages to access equity without disturbing their current home loan. This allows you to raise capital while keeping your existing loan intact.
How does a second mortgage work?
The lender assesses the value of your property and the remaining balance on your first mortgage. Based on this, they determine how much equity is available.
You can then borrow against a portion of that equity. In many cases, the combined lending across both mortgages can reach up to 70% to 80% of the property value with trading businesses able to receive 100% of the property value if they can demonstrate servicing.
Funds are typically provided as a lump sum and have terms as short as 3 months that can extend to 5 years. Many second mortgages are interest only, with the full loan amount repaid at the end of the term through refinance, sale, or business cash flow.
A key component of the lender’s assessment will include your proposed exit strategy, which outlines how you intend to repay the loan.
Key Features*
- Loan amounts: Loan amounts depend on your available equity and property value. Facilities can range from $50,000 to several million dollars.
- Loan terms: Terms are usually short, ranging from 3 months to 5 years. Some lenders may offer longer terms depending on the deal.
- Approval timeframes: Approvals can occur within a few days. Settlement is typically much faster than traditional bank lending.
- Interest rates: Rates are higher than standard mortgages due to the second position risk. Rates can range from 12% to 20% p.a. or more.
- Other costs and fees: Businesses may need to cover valuation fees and the cost of a solicitor for legal advice. Second mortgage loans also usually have an establishment fee.
- Repayment Structure: Many second mortgages are structured as interest only for a certain period.
- Equity Requirement: Lenders typically require that you have at least 20% equity in your property after the second mortgage, although there is a provider offering 100% LVRs.
- Document Requirement: Many lenders offer low doc or no doc loans, reducing the paperwork and approval time compared to traditional bank loans.
Benefits of second mortgage business loans
Access equity without refinancing
You can unlock capital without changing your existing loan.
Fast funding
Private lenders can approve and settle loans quickly.
Flexible approval criteria
How Much Could You Borrow With a Second Mortgage?
Most lenders require you to retain a portion of equity in your property after the second mortgage loan is in place.
In Australia, you can typically borrow a second mortgage up to a combined Loan to Value Ratio (LVR) of 80% of your home’s value, meaning you usually need to maintain 20% equity after taking out a second mortgage.
Example calculation
Assume your property is valued at $1,000,000 and your current first mortgage balance is $550,000. The lender allows a maximum combined Loan to Value Ratio of 80%.
Step 1:
Calculate the maximum total lending allowed
Maximum total loan amount = Property value × 80%
Maximum total loan amount = $1,000,000 × 0.80 = $800,000
Step 2:
Subtract your existing loan balance
Available equity for second mortgage =
$800,000 − $550,000
Available equity for second mortgage = $250,000
Result:
Loan Estimate
Based on this scenario, you could access up to $250,000 through a second mortgage while maintaining a combined Loan to Value Ratio of 80 percent.
What Lenders Look For
Available equity
You must have sufficient equity in your property. Most lenders require at least 20% equity remaining after the loan.
Exit strategy
Property type and quality
Residential, commercial, and some specialised properties can be used as security depending on the lender. The location and quality matter too.
Loan size and purpose
The amount requested needs to make sense relative to the property value, the purpose of the loan and your capacity to exit the loan successfully.
What You Can Use a Second Mortgage For
Working capital
Support day to day operations and manage business cash flow
Business expansion
Fund growth opportunities, new locations, or increased capacity within your business.
Debt consolidation
Tax debt
Pay ATO liabilities and avoid penalties or enforcement action.
Business acquisition
Acquire an existing business or buy out a partner using the equity in your property. This allows you to act on opportunities without waiting to accumulate cash.
Bridging finance
Cover short term funding gaps, such as purchasing a property or asset before securing long term finance or completing a sale.
Opportunity funding
Access capital quickly to act on time sensitive investments, stock purchases, or deals that require immediate funding.
Second Mortgage Loans vs. Refinancing
Second mortgages and refinancing are often compared, but they have very distinct differences.
When you refinance, you essentially replace your first mortgage with a new loan, possibly at a better interest rate or with different terms. Refinancing is a consumer loan and is regulated under the National Consumer Credit Protection Act 2009 (NCCP).
In contrast, with a second mortgage loan, you keep your original mortgage and add the second loan on top of it. This means you are making two separate payments: one for your first mortgage and one for your second mortgage. Second mortgages are business loans and are not regulated under the NCCP.
For many business owners, second mortgages can be preferable because it allows them to retain favourable terms on their first mortgage while still accessing the capital they need
Second Mortgages in the Private Lending Space and Why a Specialist Matters
Business second mortgages sit within the private lending market and are typically written to companies or trusts, not individuals. This means they are not regulated in the same way as consumer loans, and you do not receive the same protections.
As a borrower, the responsibility to assess risk sits largely with you.
Without the right guidance, you may be exposed to loan terms that work against you rather than support your business. These can include aggressive default provisions, high default interest rates, excessive fees, short repayment timeframes, and broad enforcement clauses that give the lender significant control.
Not all second mortgage lenders operate this way, but lender selection is critical.
A second mortgage specialist like Dark Horse Financial understands how different lenders operate, including their pricing, risk appetite, and enforcement approach. This allows you to be matched with a lender that suits your equity position, credit profile, urgency, and exit strategy.
Working with a specialist ensures you are dealing with lenders who have a track record of settling similar loans, with terms that are reasonable and aligned with your business goals.
Unlock Equity for Your Business
If you need fast access to capital using your property, we can help you secure a second mortgage that fits your situation.
Apply now or speak with our team to explore your options.
Frequently Asked Questions
The amount you can borrow for a second mortgage depends on your available equity and the lender’s maximum loan to value ratio. Combined lending across both mortgages is usually capped at around 80% of the property value. Loan amounts can range from $50,000 to millions of dollars. Trading businesses that can demonstrate a capacity to repay the loan in 3 years can qualify for 100% LVRs. Contact our team to learn more.
No, you do not always need good credit to qualify for a second mortgage, as many private lenders place less emphasis on your credit score and may not check your credit file at all.
Instead, second mortgage lenders focus more on the available equity in your property and the strength of your exit strategy. If there is sufficient equity and a clear, realistic plan to repay the loan within the agreed term, you can still be approved even with impaired or limited credit history.
This makes second mortgages a common option for business owners who have experienced credit issues, need fast funding, or do not meet traditional bank lending criteria, provided they can demonstrate a viable way to repay the loan.
A second mortgage can be funded within a few days once your application is submitted and approved, with some private lenders able to settle even faster. Our team can connect you with a private lender that can provide the funding you need within your required timeline.
An exit strategy is your clear plan to repay a second mortgage within the agreed loan term, which is typically short term and often ranges from a few months up to 5 years. Because second mortgages are commonly used for fast access to capital, lenders want to see a defined and realistic way the loan will be repaid before approval.
In most cases, this means refinancing into a longer term loan with a bank or non bank lender, selling the property used as security, or using incoming business revenue or a confirmed lump sum such as an asset sale or investment return.
Yes, you can use a second mortgage for almost any legitimate business purpose, as the funds are generally flexible and not restricted to a specific use. Business owners commonly use second mortgages for working capital, covering short term cash flow gaps, funding expansion, purchasing stock or equipment, consolidating existing debts, or taking advantage of time sensitive opportunities.
If you default on a second mortgage, the lender can take legal action to recover the debt, which may include enforcing their rights over the property used as security and forcing a sale.
Because a second mortgage sits behind the first mortgage, the first lender is paid out in full from the sale proceeds before the second mortgage lender receives any remaining funds. If the sale does not cover the full amount owed across both loans, you may still be liable for the shortfall.
Defaulting can also affect your credit profile and make it more difficult to secure finance in the future, which is why lenders place strong emphasis on a clear and achievable exit strategy before approving a second mortgage.
Yes, you can refinance a second mortgage, and many borrowers do this as part of their exit strategy. Refinancing usually involves replacing the second mortgage with a more traditional loan, often with a bank or non bank lender, which may offer lower rates and longer repayment terms. This can happen after improving cash flow, resolving credit issues, completing a project, or increasing equity in the property.
* To approved applicants only
Disclaimer: Loans and the benefits associated with them are only available to those who have been approved. The information provided on this page is general and does not consider your individual circumstances. It is not meant to serve as a substitute for professional advice, and you should not rely on it for any decisions. Always consult with a professional regarding finance, tax, and accounting matters before making any choices or taking action.