A Second Mortgage That Unlocked Equity Without Touching a Cheap Bank Loan
A worked example of a $600k second mortgage that unlocked working capital while keeping a cheap bank first mortgage in place. How the security choice made it fund.
Refinancing an entire facility just to release equity often costs more than it returns. A second mortgage can be the smarter path. Here is a worked example of how we structured one.
This is an illustrative example. Figures are indicative and do not represent an actual client.
The situation
A trading company needed $600,000 of working capital. They held an investment property with a $1,000,000 first mortgage from a major bank. Refinancing the whole facility to release equity made no sense: they would lose a cheap first mortgage and wear break costs to access funds they could reach another way.
The deal at a glance
- Borrower: private company (Pty Ltd), business purpose
- Security: residential investment property, valued at $2,400,000
- First mortgage (kept in place): $1,000,000 with a major bank, about 42% of value
- Vía second mortgage: $600,000, which is 25% of value on its own
- Combined position: $1,600,000 of total debt, or 66.7% of value
- Term: 12 months
How we made it work
We sat behind the bank as a second mortgagee, so the client kept their senior debt completely untouched. The number that mattered was the combined position. A $1,000,000 first mortgage plus a $600,000 second is $1,600,000, which is 66.7% of the $2,400,000 value and comfortably inside our limits. After establishment costs and legals, the borrower drew about $580,000 in usable working capital.
The detail that saved the deal
The client first proposed a different property: valued at $1,600,000 with $1,150,000 already owing. That is an existing loan-to-value ratio of about 72%, which left only around $50,000 of room, nowhere near the $600,000 they needed. We looked across their portfolio and moved the second mortgage to the property with far more equity. Same borrower, same funds, but choosing the right security is what made the deal fundable. Where the mortgage sits changes what is possible.
Broker takeaway
You do not have to refinance a good first mortgage to release equity. A second mortgage can be faster and simpler, and picking the strongest-equity security in your client's portfolio can be the difference between a decline and a settlement. Our minimum second mortgage is $500,000.
Talk to Vía Private
Vía Private provides second mortgages and equity-release finance to companies and trusts across NSW, VIC, QLD and the ACT. Brokers welcome.
Illustrative example only. Vía Private is an Australian non-bank private credit lender providing property-secured commercial loans to companies and trusts for business and investment purposes. All lending is subject to credit approval and valuation. General information only, not financial or credit advice.