Glossary

Second mortgage

What a second mortgage is, how it differs from a caveat loan, and what a first mortgagee's consent involves.

A second mortgage is a registered mortgage ranking behind an existing first mortgage on the same property, giving the second lender a formal, registered claim rather than the notice-only protection a caveat provides. Because it is registered, a second mortgage generally requires the first mortgagee's consent, or at minimum notification, and typically supports a longer term than a caveat loan while still sitting behind the existing bank facility. Borrowers use a second mortgage where the funding need will run for several months to a few years rather than weeks, or where a lender or borrower prefers the stronger, registered protection over a caveat. Lenders writing second mortgages lend against the equity remaining once the first mortgage is accounted for, and price the facility to reflect its subordinate ranking relative to the first mortgagee.

Related

Second mortgages · Caveat · Deed of priority

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