A Second Mortgage Behind the Bank for Working Capital in Paddington

If your business needs working capital and there's a Paddington terrace with equity in it, the usual way through is a second mortgage that sits behind the bank loan already registered against the property, so the bank facility isn't repaid, isn't refinanced and doesn't get repriced, and the assessment turns on how much room is left between the value and the debt rather than on how your last two tax returns happen to read.

Key facts for Paddington (2021), 12 months to September 2026

• Median four-bedroom terrace: $5.29 million. Three-bedroom: $3.72 million. Two-bedroom: $2.46 million.
• Median two-bedroom apartment: $1.45 million. One-bedroom: $883,000.
• Three-bedroom houses sell in about 55 days, four-bedroom about 61 days.
• Auction clearance on houses ran 56% to 64%, weakest at the four-bedroom end.
• 53% owner-occupiers, 47% renters, population 12,922.

How a second mortgage for working capital works

We register behind the existing first mortgagee and measure the two loans together against the value of the property, keeping the combined position inside 75% on residential security, which is how working capital comes out of a property you've already borrowed against without the first mortgage being repaid or repriced, and the bank underneath is asked to consent to the second being registered behind it, which is a normal part of the process but worth your broker raising early because it's often the longest step in the timetable.

The purpose has to be a business or investment one and the borrower has to be a company, a trust with a corporate trustee, an SMSF, or an individual where the loan isn't NCCP-regulated, because we don't write consumer credit.

What actually settles here

One private mortgage settled against Paddington property in the 90 days to August 2026, and it was an $815,600 second mortgage behind an existing bank, against a house, at 55% combined LVR, funding a business investment. The figure worth noticing is 55%, because that's a conservative position on a house plainly worth several times the loan, so this wasn't somebody running out of options, it was an owner with plenty of equity and something to buy.

Across the eastern suburbs there were thirteen in the same window, at a median 75% LVR and between $146,910 and $7,148,750, and nationally 196, with 82% secured by residential property at a median loan of $765,500 and a split of 115 first mortgages and 81 seconds. Refinance led on 55, then purchase 42, working capital 39 and business investment 26.

A worked Paddington example

Say a company owns a four-bedroom Paddington investment terrace worth about $5.29 million with $1.9 million owing to a bank, and the directors need $1 million of working capital to fund a stock and payroll run while a large receivable clears.

At 54.8% that's a conservative position and it lands almost exactly where the real Paddington settlement did, so the valuation would have to come in nearly 27% under expectation before the facility stopped fitting. On security that values as unevenly as Paddington terraces do that's the sort of margin you want.

The exit still has to be real rather than hoped for, so either the receivable lands and the facility is repaid from trading, or the position is refinanced, and if neither looks likely inside the term then the honest answer is no.

Why Paddington terraces value across a range

Two terraces on the same street can be 3.6 metres and 6 metres wide, one with rear lane access and one without, one restored and one untouched since the 1970s, so the median tells you less here than in almost any other eastern suburbs market, and if a valuation comes back well above what you expected it's worth asking what it was compared against before you rely on it.

How long would it take to sell in Paddington?

About 55 to 61 days on Domain data, with four-bedroom houses slower and clearing at 56%, which is a decent result against Sydney as a whole where house values fell 3.3% in the June 2026 quarter, clearance dropped to 48% and a record 29.3% of auctions were withdrawn. If a sale is the exit rather than trading cash flow or a refinance, take a term that can absorb a second campaign.

What Vía Private lends on

What we will not do

We don't do consumer credit regulated by the National Credit Act, so if the terrace is the home you live in and the money is for something personal, we're the wrong lender and we'll say so on the first call. We don't fund construction or development, and we don't lend against vacant land or pre-DA sites. We also won't lend where there's no credible exit, and we won't lend against a valuation we haven't tested ourselves.

Questions people ask

Can I raise working capital against a property that already has a bank loan on it? Yes, as a second mortgage registered behind the existing first. Vía Private writes second mortgages from $500,000 to $7.5 million, with the combined debt of both loans kept inside 75% of the property's value.

Does the existing bank have to consent? The first mortgagee is asked to consent to the second mortgage being registered behind it. It is a standard step, but it often takes longer than anything else, so it should be started early.

What combined LVR is realistic? Up to 75% on residential security. In practice many second mortgages settle well below that, and the one private mortgage recorded against Paddington property in the 90 days to August 2026 was an $815,600 second at 55% combined LVR.

Does my income matter? Less than it would at a bank. Short-term property-secured lending is assessed mainly on the security and the exit, and interest is commonly prepaid or capitalised rather than paid monthly.

How long does it take to sell a terrace in Paddington? About 55 days for a three-bedroom and 61 days for a four-bedroom on Domain data for the 12 months to September 2026, with auction clearance between 56% and 64%, though it's worth allowing longer than the median if the exit on your facility is a sale.

Getting a Paddington scenario looked at

Most of the scenarios we see come through accredited mortgage brokers, so if you're already working with one, send them this page and they can put it to us. If you'd rather come to us first, email begin@viaprivate.com.au with the property, the amount you need, what it's for and how you plan to repay it.

Nearby: Woollahra · Double Bay · Bellevue Hill · Bronte · North Bondi

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Figures are indicative and for illustration only. Median values are Domain suburb data for the 12 months to September 2026. Market commentary is from the Domain House Price Report, June quarter 2026. Settlement counts are from a private lending panel covering 196 mortgages funded nationally in the 90 days to August 2026. Transfer duty is calculated at Revenue NSW 2026-27 rates. Vía Private lends to companies, trusts and SMSFs for business and investment purposes only and does not provide consumer credit regulated by the National Credit Act. This page is general information and does not take your objectives or circumstances into account. Last reviewed 13 September 2026.