Two ways to unlock the equity in your property
If your home or commercial property has equity and your business needs money, there are two common ways to get at it. The first is to refinance your first mortgage: replace the existing loan with a bigger one and draw out the difference. The second is to leave the first mortgage alone and take a second mortgage behind it for the amount you need.
A second mortgage business loan lets you keep your existing first mortgage, with its rate and terms, while a private lender lends against the remaining equity. Equity Tap lends from $50k to $5m for one to twelve months by way of a first or second mortgage or caveat over Australian residential or commercial property.
Why refinancing is often too slow
A bank refinance commonly takes up to three months or more. The new lender will usually want years of financials, a credit check, a valuation and a full serviceability assessment. If anything in your file is messy, such as an ATO debt, a recent loss or a default, the process slows down or stops. And at the end of it you may not be approved for the amount you need.
There are other costs too. Breaking a fixed-rate loan can mean break costs. You may lose a good rate you negotiated years ago. And you will have turned a short-term business need into a 20 or 30 year debt.
Side by side
| Second mortgage with Equity Tap | Refinancing your first mortgage | |
|---|---|---|
| Your existing home loan | Stays where it is | Paid out and replaced |
| Time to funds | As little as 24 hours for eligible loans | Commonly up to three months or more |
| Valuation | No valuation ordered before approval | Usually required |
| Financials and bank statements | Not needed for property-secured loans | Usually years of financials |
| Credit history | No credit check at initial assessment; bad credit not automatically a problem | Defaults or ATO debt often lead to a decline |
| Approval certainty | Conditional answer often on the phone | May not approve the amount you need |
| Term | One to twelve months | Commonly 20 to 30 years |
| Repayments | Interest only, or up to six months prepaid or added | Principal and interest, usually monthly |
When a second mortgage makes more sense
- You need the money quickly. A tax deadline, a settlement date or a supplier ultimatum won't wait three months.
- Your first mortgage is on good terms. There is no point giving up a sharp home loan rate to fund a short-term need.
- Your financials are not ready. Perhaps last year's tax return isn't lodged or the business had a tough year. We don't need tax returns, BAS or bank statements for a property-secured loan.
- The need is temporary. If you will repay in a few months from a sale, receivables or a refinance later on, a short-term second mortgage matches the need.
- The bank has already said no. We handle difficult and complex scenarios that banks and cash flow lenders decline.
When a refinance might be better
If you need the money permanently, you have time to wait, your financials are clean and you can service a larger loan, a full refinance can be the cheaper long-term answer. Many of our borrowers do both: they use an Equity Tap second mortgage to get funded now, then refinance with a bank once the paperwork is in order and repay us from that refinance. That is a common and sensible exit.
Does my first lender need to agree?
Sometimes. A second mortgage sits behind your existing first mortgage, and the first lender's consent may be needed. If consent is slow or unlikely, a caveat loan can sometimes be used instead. We will tell you on the first call which structure fits your property and your timing.
How it works with Equity Tap
- Call us or apply online with the property address, your existing mortgage balance, the amount you need and how you plan to repay.
- We give a conditional answer, often on the phone, and issue a term sheet in about 30 minutes.
- We confirm ID, property and mortgage details and exit evidence. No valuer visits the property before approval.
- Documents are signed, the second mortgage or caveat is registered and eligible loans can settle in as little as 24 hours.
- You repay from your exit at the end of the term, and the second mortgage is discharged. Your first mortgage carries on as if nothing happened.
Equity Tap is regarded as one of the fastest second mortgage business lenders in Australia. Read more on our fast second mortgage business loans and second mortgage with no valuation pages, or use the equity calculator to estimate your available equity.
Pricing
Each loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation, with the full cost shown before you proceed.
Next step
Keep your home loan, get the money you need and move on. Call 1300 123 024 or apply online. Brokers can send scenarios through our broker page.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
Is a second mortgage faster than refinancing?
Will a second mortgage affect my existing home loan?
What if my first lender won't consent to a second mortgage?
Can I refinance later and pay out the second mortgage?
Do I need a valuation for a second mortgage?
Can I get a second mortgage on a commercial property?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.