Short-term second mortgages: business funds without touching your bank loan

Plenty of business owners are sitting on serious equity they can’t easily reach. The home loan is on a good deal, the bank is happy, and refinancing the whole thing to free up $150,000 would take weeks and reset a loan that’s working fine. A short-term second mortgage solves that. It slides in behind the bank, raises the money against the equity above the first loan, and leaves the bank’s arrangement exactly where it was.

What is a short-term second mortgage — and who uses one?

It’s a business loan secured by a mortgage registered on your title in second position, behind your existing lender. The first lender keeps its place and its terms; the second lender’s claim ranks after it.

The short-term part means:

• the loan runs for a matter of months and has a planned end date;
• it’s cleared by a single event — a sale, a refinance, a big receivable;
• loans run from $20,000 to $5,000,000;
• the security can be a home, an investment property or a commercial building;
• the funds are used for the business.

Owners who reach for one usually share a profile: good equity, a bank loan they want to keep, and a need for money faster than any bank can deliver it — an ATO debt to clear, a supplier to pay, a contract to start, a business to buy.

Second mortgage or caveat: does your state decide it?

Partly, yes — and in a helpful way.

Where the property is	Fast options behind your bank
Victoria	Short-term caveat loan or short-term second mortgage
New South Wales	Short-term second mortgage
Queensland	Short-term second mortgage
Western Australia	Short-term second mortgage
South Australia	Short-term second mortgage
Tasmania, ACT, Northern Territory	Short-term second mortgage

Caveat loans are written for Victorian property. Outside Victoria, the registered second mortgage is the fast lane, and it typically settles on a timeline every bit as quick. Even in Victoria, some owners pick the second mortgage when the term is likely to run a little longer or the amount is large. The caveat loans page covers the Victorian option, and the overview of every short-term structure puts them all side by side.

How much equity do you need behind the first loan?

What matters is the combined LVR: the first loan plus the new second mortgage, divided by the property’s value. business.gov.au defines LVR as the ratio of the loan amount to the market value of the property, and it’s how a lender checks it could recover the money if things went wrong.

A quick way to think about it:

1. Start with a realistic value — what it would sell for in a normal campaign, not the best sale in the street.
2. Subtract what’s owing on the first mortgage, including any redraw you’ve used.
3. We’ll lend into part of that equity, leaving a buffer. The size of that buffer depends on the property type, location and your exit.

Our equity and LVR guide explains how valuers and lenders arrive at the numbers, and the borrowing calculator gives you a private estimate in seconds.

If the numbers look workable, start your second mortgage enquiry — it’s a one-minute form.

How quickly can a second mortgage be registered?

Faster than many people expect. Property-secured amounts of $20k to $250k are possible same day, and loans up to $5m are possible within 24–48 hours when the documents are ready.

Electronic lodgement is a big reason why. In New South Wales, all land dealings have been lodged electronically since 11 October 2021, and Queensland’s mandate (from February 2023) covers mortgages and caveats among other dealings. A registered second mortgage now moves through the same digital channels as any other settlement.

The things that genuinely affect timing:

• whether your first lender’s contract calls for its consent or a priority arrangement — Queensland, for instance, has a dedicated mortgage priority form for recording which loan ranks first;
• how quickly a valuation can be done;
• whether the owner is an individual, a company or a trust (and whether its documents are to hand);
• how clear the exit is.

What does a second mortgage deal look like?

An illustrative scenario with round numbers and a made-up business — not a quote.

A transport operator owns a brick family home in a Brisbane suburb valued at $1,100,000, with $600,000 owing to the bank on terms the owner is happy with. A logistics contract has been signed, and the business needs $150,000 for deposits on two prime movers, payable within five business days. The contract’s first monthly payments start in about three months, and the operator plans to refinance the equipment through a bank once those payments are flowing.

• Equity above the first loan: $1,100,000 − $600,000 = $500,000.
• Combined LVR with the new loan: ($600,000 + $150,000) ÷ $1,100,000 ≈ 68%.
• Why a second mortgage: Queensland property, a bank loan worth keeping, and an amount within the same-day range.
• Exit: the equipment refinance, backed by the contract payments, clears the second mortgage.

Had this home been in Geelong, a caveat loan would have been an equally quick alternative.

What happens to your bank loan along the way?

Nothing changes on its side. Repayments continue as normal, the rate and term stay the same, and the bank remains first on title. When the short-term loan is repaid, the second mortgage is released at the land registry and the title shows only your bank again. If the exit is slipping, raise it early — a short extension or a move into a different short-term structure is far easier to arrange before the due date than after. For a closer look at private lenders in second position, see private second mortgages.

Let’s see what your equity can do

If you’ve got equity behind your bank and a deadline in front of you, a short-term second mortgage might be the fastest way to bridge the two — in any state.

Our enquiry is quick: around 60 seconds. It carries no credit check when you first enquire, and we never broadcast your application to a long list of lenders. Instead, a real person reviews your property and timing and gives you a call. Please take care with the form — the property address and state, the balance of your first loan and the date the money’s needed make all the difference to getting the right answer first time.

Find out what I could borrow →