Second Mortgage Loans

Use the equity in your property to help your business

Getting the most value out of a second mortgage

If your business needs an injection of capital, using the equity in your property may be a viable option even if you have an existing mortgage. Getting approved for a business loan can be a lengthy process and will generally have a significantly higher interest rate than your existing loan.

This is where a second mortgage loan can work wonders. Using equity that you already have in your property you can draw upon additional funds which can in turn be used for your business. Most importantly, the money will be borrowed at a rate comparable to that of your home loan rather than paying a premium rate for an alternate loan.

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What is a second mortgage loan in Australia?

A second mortgage is a loan secured by a property in addition to the primary mortgage. Depending on the value of the property and existing mortgage, you can obtain finance based on any available equity in the property.

Essentially, second mortgages are more like a line of credit than a secondary loan. The finance will essentially be obtained from the existing equity in your residential or commercial property. If you have a significant amount of equity in your property and are comfortable with your current mortgage commitments, a second mortgage loan can help improve your business.

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Understanding second mortgages

The thought of using the equity in one’s home to help their business can be overwhelming. With an understanding of the reasons and benefits, it does not have to be.

Why 2nd mortgage loans?

  • Funds can be used to improve key areas of your business including finance, technology, operations, and marketing.
  • Assists with operating cash flow.
  • Debt-consolidation – drawing on the equity of home could allow you to pay off other debts which are incurring higher interest rates.
  • Acquire business plant, machinery, and equipment.

2nd mortgage loans with Simply Funds

  • Effective alternative to mainstream lending with more flexible criteria.
  • Bad credit accepted.
  • Low-Doc application means makes for a fast and easy approval process.
  • Access lower interest rates than other loans.
  • Line of credit type facility means interest only on repayments.
  • Up to 70% LVR (loan to value ratio).
  • Loan settlement and funds provided within 48 hours.
Our team of experts are on hand to share their knowledge and expertise of the mortgage business. They can help you make the right financial decisions.

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Second Mortgages FAQ

What does a second mortgage mean?
A second mortgage is a loan secured by a property in addition to the primary mortgage. Depending on the value of the property and existing mortgage, you can obtain finance based on any available equity in the property.
How does a second mortgage work?
It is the process of taking out a second mortgage on a property that has already been used as collateral to borrow additional money. This is possible if there is equity available on the current property. A rise in the value of the property or the paying down of the loan are two ways which allow for a second mortgage to take place.
How long does it take for a caveat loan to be processed?
Second mortgages take slightly longer than other alternative financing methods as they require additional steps. This includes details of your first mortgage and the registration of a second mortgage on the property. This process is usually completed in 2-3 weeks.
Why would you get a second mortgage?
Getting a second mortgage is a viable option in many circumstances. Many alternative loan types have significantly higher interest rates and may have to be repaid over a shorter period. As a second mortgage is a secured loan, it is not only easier to get approved for a loan, borrowers are generally also able to borrow a large amount as real estate carries significant value when compared to other assets. Second mortgages are often used to consolidate debt or to obtain funds for business use.
What is the difference between a first and second mortgage?
The term ‘first mortgage’ refers to the original loan taken out to buy a property. A ‘second mortgage’ is the charge over a property that already has a mortgage on it. It sits behind the first and is used to borrow additional funds. In the event of the property being sold, the first mortgagee with receive any outstanding principal, interest, and costs before the second mortgagee receives any payment.
Do I have to get my second mortgage from the same place as my first?
No. First and second mortgages are independent from one another. This allows borrowers to seek alternative financing if their banks reject an application. It also means that you can have alternate repayment plans for each.
How much money can you borrow on a second mortgage?
This will depend on the value of your property and the available equity currently available while considering the first mortgage. Those with equity in a residential or commercial property can get up to 70% LVR (loan to value ratio). Rural property can still be used but the LVR will likely be lower.
Can a caveat be challenged or removed?
This will depend on what the funds will be used for. If they are being borrowed to pay off a debt that carries a higher rate of interest repayments or is in danger of default, it could in fact help your credit score. Our flexible repayment options and line of credit type facility mean that borrowers can select interest only repayments.
Should I get a second mortgage to pay off debt?
Debt consolidation is one of the main reasons why people take out a second mortgage. One of the benefits of a second mortgage is that borrowers can access interest rates that are comparable to their home loan. Our flexible lending criteria makes it fast and easy to get approved.

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