Who Lends Second Mortgages in Australia? The Lender Classes Explained
Property Lending
Lender classes · Regulatory status · Second ranking security
Second mortgages in Australia are not written by one kind of lender. They are written by several, and what separates those lenders is regulatory status rather than marketing language. This guide sets out which classes actually write second-ranking security, who supervises each one, how to check a lender and read its offer, and what happens between finding a lender and the money arriving.
Quick Answer
Second mortgages in Australia are written mainly by specialist non-bank lenders, private lenders and some mortgage funds rather than banks. What separates the classes is regulatory status: whether the lender takes deposits, holds a credit licence, or runs a registered scheme.
Also called: 2nd mortgage lenders, second ranking mortgage lenders, subsequent mortgage lenders.
| Where you are | What usually happens next | What to check first | Where this guide covers it |
|---|---|---|---|
| Your bank has said no to more borrowing | You look for a lender willing to rank behind the bank, which usually means a non-bank or private lender | Whether your first mortgage requires the bank's consent before you give anyone else security over the property | Why banks rarely lend behind another lender |
| You have found lenders online and are about to enquire | Phone calls, requests for documents and, often, a check of your credit file | Whether you are dealing with a lender, a broker or a site that passes your details on, and how many applications you are about to trigger | Before you fill in an enquiry form |
| Someone has asked for a fee before any written offer | If it is the scam pattern Scamwatch describes, the fee is paid and the loan never arrives | Stop, and verify the lender independently before sending any money | How to check a lender is who it says it is |
| You have an offer or term sheet in hand | Security documents, a business purpose declaration, a valuation and first mortgagee consent | The amount that actually reaches your account and the total you will repay | What to check in the offer |
| The money is needed within days | A privately funded lender is the class most likely to move that fast | First mortgagee consent, because it is the step most likely to outrun your deadline | What decides how long it takes |
| The money is for personal or household use | You would be asked to sign a business purpose declaration that does not describe your loan | Whether a business-purpose lender is the right class for you at all | The business purpose declaration |
Which lenders offer second mortgages in Australia?
Second-ranking mortgages in Australia are written mainly by specialist non-bank lenders, private lenders and mortgage funds, with banks and other authorised deposit-taking institutions doing so rarely and usually only behind their own first mortgage. In summary, the lender classes are:
- Specialist non-bank lenders, which take no deposits and lend from wholesale funding lines and securitisation.
- Private lenders, which lend money from individuals, family offices and small funds.
- Mortgage funds, mainly contributory funds, where investors choose the individual loans they are in.
- Banks, building societies and credit unions, rarely, and usually only behind their own first mortgage.
Everything useful about those classes sits on one axis, and it is not the axis the market advertises on.
The axis is regulatory status, not marketing label. Three questions separate every lender in the table below. Does it take deposits? Does it hold a credit licence, and does it need one for the kind of credit it writes? Does it operate a registered scheme with somebody else's money in it? Answer those three and you have placed the lender, and you have also worked out which rulebook governs the loan you are being offered.
The licence question is the one most often read backwards, so it is worth putting the right way around: a licence tells you something about a lender, it does not tell you whether a lender is any good. The Australian Securities and Investments Commission (ASIC) guide Regulatory Guide 203, Do I need a credit licence? puts the test plainly at paragraph 9: "Whether the licensing requirements apply will depend on whether your activities relate to a type of credit or consumer lease to which the National Credit Code applies." It then states at paragraph 17 that "If the credit is provided or goods are hired wholly or predominantly for business or investment purposes (other than investment in residential property), the National Credit Code will not apply." Issued October 2017 and last modified 8 May 2025.
The practical consequence for a business borrower follows directly. A lender that writes only business-purpose loans may hold no credit licence at all and still be operating entirely lawfully, so searching a register and finding nothing has told you very little. A lender that does hold one was built for consumer credit, and those consumer protections do not travel across to a business-purpose loan just because the lender happens to be licensed. The licence tells you which system the lender was designed for. It is not a quality mark.
One vocabulary note before the classes. A "second charge mortgage" is the British term for the same instrument and is not Australian usage; in Australia this is a second mortgage or a second-ranking mortgage, and the parent guide to second mortgages uses that language throughout. If you are comparing what you are being offered against a second mortgage loan here, make sure the page you are reading is describing the Australian instrument.
| Lender class | Takes deposits? | Licence or registration typically held | Who supervises it | What that changes for the borrower |
|---|---|---|---|---|
| Bank, building society or credit union (authorised deposit-taking institution) | Yes | Banking authority, plus a credit licence for its consumer lending | APRA for capital and credit risk, ASIC for conduct | Capital and credit risk rules shape what it will hold, so second-ranking security behind another lender is uncommon |
| Specialist non-bank lender | No | Credit licence where it writes consumer credit, commercial-only lenders may hold none | ASIC for conduct, no prudential supervisor | Policy follows the funding line, so appetite can move when the funder's terms move |
| Private lender | No | Often none, where the lending is wholly or predominantly for business purposes | ASIC, with a narrower reach over commercial loans | Decisions are made close to the money, and the protections sit in the loan documents rather than in credit legislation |
| Pooled mortgage fund | No | Financial services licence, and a registered managed investment scheme where offered to retail investors | ASIC, through the responsible entity | Benchmarked toward first mortgages, so second-ranking lending is the exception it has to explain to its investors |
| Contributory mortgage fund | No | Financial services licence, and a registered scheme where offered to retail investors, with investors selecting individual loans | ASIC, through the responsible entity | The fund structure that can realistically sit behind a first mortgage, loan by loan |
Why do banks rarely write second mortgages behind another lender?
Banks rarely write a second mortgage behind another lender's first mortgage because every loan they make has to be capitalised and managed inside a prudential credit risk framework, and ranking behind a lender they do not control is hard to justify inside that framework. No prudential rule prohibits it, which is why a bank will still lend behind its own first mortgage.
An authorised deposit-taking institution (a bank, building society or credit union) is the only class here that holds retail deposits, and the price of that authorisation is supervision by the Australian Prudential Regulation Authority (APRA). APRA's credit risk management standard requires "an authorised deposit-taking institution to implement a credit risk management framework that is appropriate to its size, business mix and complexity", and its capital adequacy standard requires an institution to "maintain adequate capital, on both a Level 1 and Level 2 basis, to act as a buffer against the risk associated with its activities". Neither says anything about ranking. Both make every exposure something the institution has to capitalise, document and defend internally.
The popular claim that banks never write second mortgages is slightly wrong. Banks do lend behind an existing loan regularly. They do it as a further advance behind their own first mortgage, where they already hold the security, already know the borrower and can see the whole position. What they rarely do is rank behind a mortgage held by somebody else, because it hands control of enforcement and of the first mortgagee consent process to an organisation with different priorities. In practice, that is the fork most business owners actually hit: the bank that says no to a second mortgage is often saying no to being second to a stranger, not to the borrowing itself.
The distinction matters for how you approach it. If your first mortgage is already with a bank, the second-ranking question may not be a second-ranking question at all, and the second mortgage guide covers how that request is usually handled. If your first mortgage is somewhere else, you are almost certainly looking at one of the classes below. And if your first loan is not worth keeping, refinancing the whole loan instead of adding a second mortgage may be the cleaner route.
What is the difference between a non-bank lender and a private lender?
The difference between non-bank lenders and private second mortgage lenders is that the two labels describe different things: "non-bank" means the lender takes no deposits, while "private" describes where the money comes from, so one lender can be both. A non-bank lender typically uses wholesale funding lines and securitisation, while a private lender draws on the balance sheets of individuals, family offices and small funds. Every other difference you will notice, in speed, in flexibility, in what the lender asks for, follows from the funding.
The labels blur in practice. The Reserve Bank describes private credit as a form of non-bank lending, typically run by asset managers and funded by investors such as superannuation funds, insurers and family offices, and it notes that non-banks face fewer prudential constraints than banks because they do not take deposits. So the useful move is to treat each label as a prompt for a question, not as an answer.
| Label | What it tells you | The next question to ask |
|---|---|---|
| Non-bank lender | The lender does not take deposits, so it is not supervised as a bank, and it can be funded in more than one way | How is this lender funded, and what policy does that funding impose on my loan? |
| Private lender | Market language for lending from private, family office or investor capital rather than a deposit base | Who makes the credit decision, who is named in the loan documents, and is it a member of AFCA? |
| Private credit or debt fund | A form of non-bank lending where investor money is pooled and lent through an asset manager or fund | Who operates the fund, is it offered to wholesale or retail investors, and what mandate applies to my loan? |
| Mortgage fund | A fund that invests in loans secured by mortgages over property, structured as pooled or contributory | Does its mandate allow second-ranking security, and who must approve my loan? |
| Broker or comparison site | Not necessarily a lender at all | Who will receive my details, who will check my credit file, and who actually advances the money? |
A wholesale funding line comes with terms. The funder sets what the lender can write, at what ratios, against what kinds of property, and the lender's credit policy is downstream of that. It produces consistency, it produces a documented process, and it produces the slower answer, because the file has to fit a policy somebody else wrote. Private money has no such line. The decision-maker is closer to the money, often in the room, and the answer can be quick in both directions. Neither takes a more favourable view because it is friendlier. They are answering to different people, and that is the behaviour you are actually seeing when one class comes back in days and another in weeks.
The most common claim about this class, that business-purpose private lending is unregulated, needs correcting. A business-purpose private mortgage that sits outside the National Credit Code, which is Schedule 1 to the National Consumer Credit Protection Act 2009, is not, on that account, unregulated. It is outside one statute. The lender is still a company subject to corporate and conduct law, the loan is still a contract that a court will read, standard form small business contracts are still exposed to the unfair contract terms regime, and the security still lives or dies in the state title system. What changes is where the protection comes from, which is why the documents in front of you carry more weight on this class of loan than they would on a regulated consumer facility. The private lending entry and the private lending page set out how that arrangement is normally structured.
Accurate things to say about this class
- Business-purpose credit generally sits outside the National Credit Code
- A commercial-only lender may lawfully hold no credit licence
- "Non-bank" describes how a lender is regulated and "private" describes where its money comes from, so one lender can be both
- Protection comes from the loan documents, the title system and the general law
- Speed is a consequence of who makes the decision, not a service promise
Inaccurate things said about this class
- That the space is largely unregulated
- That a missing credit licence is a warning sign on a business loan
- That non-bank and private mean the same thing
- That consumer protections carry across because the lender happens to be licensed
- That a faster answer means a looser assessment
Can a mortgage fund lend you a second mortgage?
Some mortgage funds can: a contributory mortgage fund can sit behind a first mortgage loan by loan, while a pooled mortgage fund is benchmarked by ASIC toward first mortgages and has to explain any second-ranking lending to its investors. Most published material on mortgage funds is written for investors rather than borrowers, so this is rarely stated.
Mechanically, a mortgage fund offered to retail investors is a registered managed investment scheme operated by a responsible entity, the organisation legally accountable for the scheme, holding a financial services licence and answering to ASIC. The split that matters to a borrower is between pooled and contributory. In a pooled fund, investors hold an interest across the whole loan book and the fund manages the portfolio. In a contributory fund, investors are matched to individual loans and choose the ones they are in.
The pooled versus contributory split is what ASIC's benchmarks act on. ASIC Regulatory Guide 45, reissued March 2026, sets eight benchmarks and eight disclosure principles for unlisted mortgage schemes offered to retail investors. Two of them decide this question, and both are marked as applying to pooled schemes only. They are benchmarks, not prohibitions: a scheme that does not meet one is required to say so and explain why, which ASIC calls an if not why not basis. In short, ASIC's benchmark for a pooled scheme is that a first mortgage secures every loan it makes, and a pooled scheme must disclose the percentage of its loans secured by second-ranking mortgages.
Why can you not find a mortgage fund that will write your second mortgage? Because the pooled funds, which are the ones most visible to the public, are benchmarked in the opposite direction, and the funds that can sit behind a first mortgage are generally contributory, where an investor has agreed to that specific loan. If you want to see what that looks like from the funding side, the fund that funds your loan walks through the same mechanics.
ASIC's private credit surveillance report and its June 2026 valuation warning matter to a borrower for a practical reason rather than an academic one. When a funder is under pressure on valuations and disclosure, its appetite tightens, and a borrower feels that as a slower answer or a smaller number long before anyone publishes anything about it.
Is there an official list of second mortgage lenders in Australia?
No. None of the Australian regulators, statistics agencies, complaints bodies or industry associations checked for this guide publishes a register of second mortgage lenders, a count of how many are active, or any measure of the market they write. That absence is not an oversight on our part, and it is the reason this page is a taxonomy rather than a list.
The method matters as much as the finding, so here it is. Each body below was checked against what it actually publishes, not against what it might be assumed to publish: the Australian Prudential Regulation Authority's quarterly property exposure statistics, the Australian Securities and Investments Commission's guidance and surveillance reporting, the Reserve Bank of Australia's financial stability publications, the Australian Bureau of Statistics lending series, the Australian Financial Complaints Authority's complaint rules and member search, and the two broker associations. Every body checked publishes something about mortgage lending or lenders, and not one of them identifies second-ranking lending as a category.
| Body | What it publishes | Does it identify second-ranking lending? |
|---|---|---|
| Australian Prudential Regulation Authority (APRA) | Quarterly property exposures for authorised deposit-taking institutions, March 2026 quarter released 29 June 2026: residential split by owner-occupied and investment, the share of new lending at or above an 80 per cent loan-to-valuation ratio and at or above six times income, loans 30 to 89 days past due, non-performing loans, and commercial property exposures | No. Coverage is deposit-taking institutions only and there is no second-ranking or subordinate category |
| Australian Securities and Investments Commission (ASIC) | Conduct and disclosure guidance, including Regulatory Guide 45 for mortgage schemes and Regulatory Guide 203 on credit licensing, plus surveillance reporting such as Report 820 of 5 November 2025 | No. It regulates conduct and disclosure, it does not count lenders or size a market |
| Reserve Bank of Australia (RBA) | Financial Stability Review and bulletin articles covering non-bank lending at a system level, most recent review 19 March 2026 | No. The treatment is systemic, not a register of lenders or loans |
| Australian Bureau of Statistics (ABS) | Lending Indicators, June quarter 2026 released 14 August 2026: new housing, personal and business commitments, with housing split by owner-occupier, investor and first home buyer | No. There is no second-mortgage or subordinate-ranking category in the collection |
| Australian Financial Complaints Authority (AFCA) | Complaint rules and a searchable list of member firms, read 11 September 2026: a complaint must be about an AFCA member, and small businesses with fewer than 100 employees can complain | No. Its member search shows which firms can be complained about, not what security they write. Its complaint statistics were not checked for this guide |
| Mortgage and Finance Association of Australia (MFAA) | Quarterly market share data compiled by Cotality, June 2026 quarter released 3 September 2026, reporting that mortgage brokers "facilitated 81.6% of all new residential home loans during the June 2026 quarter" | No. The measure is residential home lending only and says nothing about second-ranking or commercial security |
| Finance Brokers Association of Australia (FBAA) | Accreditation, professional standards and member education | No. It accredits brokers, it does not publish lender or loan statistics |
There is a reason to state this rather than quietly work around it. If you have been searching for an authoritative list of who writes second mortgages in Australia and found only marketing pages, that is not because you searched badly. No regulator or statistics agency publishes one. What can be established is the class a lender belongs to, whether its security will be a registered mortgage, and what each class is answerable to. That is the check worth running, and the steps for running it are set out under what happens after you find a lender.
How is interest paid on a second mortgage, and what repayment plan will lenders accept?
Interest on a second mortgage is paid in one of four ways: serviced monthly from cashflow, prepaid, retained from the advance at settlement, or capitalised, and which one a lender uses follows its funding source. Institutionally funded lenders generally want interest serviced from business cashflow like any other facility, while privately funded lenders more often structure it to be prepaid, retained at settlement or capitalised, because their investors are being paid from the loan itself rather than from a funding line.
| Approach | What it means | Typically seen with | What it changes for the borrower |
|---|---|---|---|
| Serviced monthly | You pay interest from cashflow while the loan runs, as you would on any term facility | Banks and institutionally funded non-bank lenders | The lender needs to see the cashflow that services it, so the assessment looks more like ordinary business lending |
| Prepaid | Interest for a set period is paid at the front, before the funds are advanced | Private lenders and some specialist funders | The cost lands upfront and reduces what actually reaches your account, so the net proceeds are the number to check |
| Retained at settlement | The lender holds back interest for part or all of the term out of the advance itself | Private lenders and contributory funds | No monthly payment during the retained period, but the facility has to be sized to carry it |
| Capitalised | Interest is added to the balance as it accrues and repaid at the end | Private lenders, and funds where the investor has agreed to it | The debt grows while the loan runs, so the repayment plan has to clear a larger figure than you drew |
The second half of the question is what the lender will accept as a repayment plan at the end of the term, and here the classes genuinely diverge. An institutionally funded lender usually wants the plan evidenced in a form it can file: a signed contract of sale, a refinance that a credit team can see lining up, a completion date supported by a program. A private lender is more willing to take a view on a plan that has not fully crystallised, because it is pricing that uncertainty rather than passing it up a funding line. What neither class accepts, whatever the exit strategy is called in the conversation, is an intention with nothing behind it. What lenders actually look at first on a second-ranking file is how the money leaves, and what private lenders need to fund quickly is mostly evidence of exactly that. The second mortgage entry covers the instrument itself, and going direct to a private lender covers what changes when there is nobody testing the structure for you.
What does a second mortgage cost, and does anyone official publish it?
No Australian regulator publishes what a second mortgage should cost. The Reserve Bank's lenders' interest rates cover housing loans and small, medium and large business loans, compiled from APRA data, and have no series for second mortgages or private lenders, so those averages are not a benchmark for a second-ranking loan. We found no second mortgage pricing published by ASIC or APRA either. The one set of charges that is published is the land registry's own, and the Victorian schedule is set out in registering a second mortgage in Victoria.
The rates you see online are lenders' and brokers' own, and published starting rates differ widely, sometimes between pages on the same site, because each quote assumes a different property, loan size and risk. What actually moves your price is the combined loan-to-value ratio across both mortgages, the property type and location, who holds the first mortgage and how cleanly it consents, how firm your repayment plan is, the term, your credit history and how fast you need the money. What drives second mortgage rates covers those levers in more detail. When you compare quotes, put every monthly rate on an annual basis and compare the amount that reaches your account and the total you will repay, using the offer checklist below.
What happens after you find a second mortgage lender?
After you find a second mortgage lender, the process usually runs in the same order: you check who you are dealing with, receive an offer, sign a business purpose declaration and the security documents, and then wait on first mortgagee consent, the lender's valuation and legal sign-off before any money is released. Most of what goes wrong happens in that order too, which is why each step is set out below. The borrower side of that same sequence, from what the application form asks to what you sign, is set out in how to apply for a second mortgage.
Before you fill in an enquiry form
Search results for second mortgage lenders often lead with headline rates quoted per month and phrases like no credit checks. Neither tells you much. A monthly rate looks small until it is multiplied across a year and the fees are added, and a lender that checks less about you is not ignoring the risk, it is carrying it through the property and the price.
Three things are worth settling before you enquire anywhere. First, know who you are dealing with: a lender, a broker, or a site that collects your details and passes them on (the questions below settle it), because Scamwatch warns that scammers pose as financial service providers and loan brokers online. Second, shortlist before you apply, because a lender that checks your personal credit file for a business loan can leave an enquiry on it, and a run of enquiries in a short time is read by the next assessor; how many credit enquiries is too many covers how that is read. Third, ask your first lender about consent before you accept any offer, because it is the step most likely to decide your timing.
Having the basics ready also changes the quality of the answer you get back, and it shortens the time between enquiry and offer.
| Document or information | Why the lender wants it | When it matters most |
|---|---|---|
| Property address, ownership and current title details | Confirms the security, the registered interests and who can grant the mortgage | Every second-ranking application |
| Current first mortgage statement, limit and payout information | Shows the debt already ahead of the new lender and flags any cross-security or priority issues | Every application, especially where the first loan secures more than one property or facility |
| Amount required, exact purpose and deadline | Lets the lender test whether the product and the timing fit the transaction | Every application |
| Evidence of the repayment plan | Shows how the loan will be repaid rather than describing an intention | A sale, refinance, project completion or other defined repayment event |
| Borrower and guarantor identity, company details and any trust deed | Confirms legal capacity, signing authority and who is giving security or guarantees | Companies, trusts, family structures and loans supported by guarantors |
| Business bank statements, BAS, financials or an accountant's letter | Helps assess serviced interest, business cashflow and the stated purpose | Institutionally funded or serviced facilities, and any file where cashflow is part of the repayment plan |
| Purpose-specific evidence | Tests whether the loan actually solves the transaction | For example a contract of sale, settlement notice, ATO statement of account, project budget or acquisition contract |
Is the website the lender, a broker, or just passing your details on?
Do not decide from the brand name or the words private lender on a website. A broker arranges a loan without advancing the money, a mortgage manager or originator may assess and run a loan for a fund or investor, and a lead-generation site may simply pass your enquiry to somebody else. Five questions settle it before you send any documents.
| Question | What the answer tells you | Why it matters |
|---|---|---|
| Who is named as lender or mortgagee in the documents? | The legal entity or trustee that takes the debt and the registered security | The website brand and the contracting entity can be different |
| Who has final credit authority? | Whether the person quoting terms can approve the loan or must refer it elsewhere | An indicative quote is not the same as a committed funding decision |
| Whose money is behind the loan? | Whether funding comes from the entity's own balance sheet, a private investor, a wholesale funder or a mortgage fund | The funding model affects process, mandate and certainty of settlement |
| Is more than one funder being compared? | Whether the business is acting as a broker or arranger rather than a single lender | It changes how to read claims about "our" rates, policy and approval appetite |
| Who gets paid, and when? | Every broker, management, introduction, valuation, legal and lender fee, and who receives it | You need the whole cost chain, not only the lender's headline rate |
How to check a second mortgage lender is who it says it is
A second mortgage lender can be checked in five places, and each check answers a different question. None of them is a quality rating, and a missing credit licence is not a warning sign on its own for a business-purpose lender, but a lender that will not let you run these checks is.
| Check | Where to check it | What it tells you | What it does not tell you |
|---|---|---|---|
| Licence or registration | ASIC professional registers | Whether the entity holds a credit licence or a financial services licence, what it covers, any conditions, and whether a fund is a registered managed investment scheme | Quality. Moneysmart notes that holding a credit licence does not mean ASIC endorses the licensee, and ASIC's information sheet on commercial loans (INFO 207) confirms a lender that only makes commercial loans is not required to hold one |
| Business identity | ABN Lookup on the Australian Business Register | Whether the ABN is active or cancelled, the entity type and its GST status | Whether the entity actually lends, or whether the person contacting you works for it |
| Complaints scheme | Australian Financial Complaints Authority (AFCA) member search | Whether you could take a dispute to AFCA, which can only consider complaints about its members, and only within its monetary limits for small business credit facilities | ASIC's INFO 207 notes a commercial-only lender is not legally required to join AFCA, so a lender outside it may still be lawful, but a dispute with it would need private legal advice and, if it goes further, the courts |
| Bans and warnings | ASIC banned and disqualified registers and the Moneysmart investor alert list | Whether ASIC has banned the entity or flagged it as a possible scam | Absence from these lists is not an approval |
| Contact and payment details | A phone number you find yourself, and the account name on any payment request | Whether the person you are dealing with really represents the lender | Nothing about the loan itself; this check protects you from impersonation |
The Scamwatch alert on loan scams of 19 March 2026 explains why the last row matters: scammers may quote a real company's ABN and credit licence details to appear genuine, so call the lender on a number you source yourself, and before paying anything, confirm the account name matches the lender. A legitimate lender may charge a valuation or application fee once there is a written offer. A demand for money before any documented offer, or into a personal account, is the pattern Scamwatch describes.
What to check in a second mortgage offer before you sign
The numbers to judge a second mortgage offer on are the amount that actually reaches your account and the total you will repay, not the headline rate. Fees, interest held back at settlement and the terms that only apply if something runs late all sit in the offer, and no official schedule sets any of them, so they vary from lender to lender.
Ask the lender to show you the net cash calculation in writing: the approved amount, less any interest prepaid or retained, less the establishment, broker, legal and valuation costs, less any payouts it requires at settlement. Then ask for the payout figure if the loan is repaid on the planned date, and again if it is repaid early or late.
| Item | What to look for | Why it matters |
|---|---|---|
| How the rate is quoted | Whether the rate is per month or per year, and what the default rate is | A monthly rate is roughly twelve times larger across a year before any fees, and the default rate is what you pay if anything goes wrong |
| Fees | Establishment or lender fee, any broker fee, the lender's legal costs and the valuation fee | These are commonly deducted from the advance or charged at settlement, so they change what you actually receive |
| When fees fall due | Whether any fee becomes payable when you sign or accept the offer, rather than only at settlement | An offer labelled indicative can still make fees payable if you withdraw before the loan settles |
| Interest held back | Any prepaid or retained interest | It reduces the amount reaching your account from the first day of the loan |
| Minimum term and early repayment | Any minimum interest period or early repayment fee | It decides the cost if your sale or refinance lands earlier than planned |
| Extension | Whether an extension is available, what it costs and who decides | If your repayment plan runs late, this clause decides what happens next |
| Security package | The second registered mortgage, and any general security agreement over business assets registered on the Personal Property Securities Register, or any personal or director guarantee | Security beyond the property means more than the property is at risk if the loan is not repaid |
| Purpose | The business purpose declaration and what it says the money is for | It decides whether the National Credit Code applies to the loan |
| Conditions before the money is released | First mortgagee consent, the lender's valuation and any independent legal advice requirement | Any one of these can push settlement past your deadline |
Read the security documents as well as the offer letter. The offer tells you the price; the mortgage, any general security agreement and any guarantee tell you what the lender can do if the loan is not repaid, and on a business-purpose loan those documents carry most of your protection.
Can an indicative offer make you pay fees if the loan never settles?
Yes, it can. The word indicative does not make every clause non-binding: an offer can leave the loan itself subject to valuation, credit approval and documents while making a commitment fee, valuation costs, legal costs or a cost indemnity payable as soon as you accept it. In a 2024 decision of the Supreme Court of Queensland, [2024] QSC 120, a business borrower signed an indicative letter of offer for a loan to be secured by second mortgages, then withdrew before settlement. The lender claimed the fees the offer made payable, and the court rejected the borrower's argument that those fee terms were unfair, largely because the offer had been negotiated through the borrower's broker rather than presented on a take it or leave it basis.
That does not mean every indicative offer binds you or every fee is enforceable; it means the binding effect has to be read clause by clause. Before you sign or authorise any work, ask in writing what remains payable if either side does not proceed, and have your solicitor read the acceptance and fee clauses first.
The business purpose declaration you will be asked to sign
Before settlement, a business-purpose lender will usually ask you to sign a declaration that the credit is to be used wholly or predominantly for a purpose the National Credit Code does not cover, such as a business purpose. Under section 13 of the National Credit Code, that declaration creates a presumption that the Code does not apply, which makes it the document that takes the Code's consumer protections off the table for your loan.
The presumption is not absolute. The Code makes the declaration ineffective if the lender, or a person involved in obtaining it such as a broker, knew or had reason to believe, or would have found out with reasonable inquiries, that the money was really for personal, domestic or household use. In April 2025 the Federal Court applied exactly that test, finding that a business lender and a business loan introducer could not simply rely on a signed declaration and had to make reasonable inquiries about what the credit was for (ASIC media release 25-060MR).
What you give up is spelled out by ASIC itself. The Code carries disclosure requirements, limits on fees and interest rates, hardship provisions and free access to external dispute resolution, while ASIC's information sheet on commercial loans (INFO 207) says the law gives commercial loans, including loans to small businesses, the lowest level of protection. What remains is the general protection of the ASIC Act against unconscionable conduct, misleading or deceptive conduct, and unfair terms in standard form small business contracts.
A loan with a personal part is a mixed-purpose loan. The Code only reaches credit to individuals and strata corporations, so where the borrower is your company it does not apply at all, and where you borrow in your own name it turns on whether the credit is wholly or predominantly for personal, domestic or household purposes. A loan that is mostly for the business can therefore sit outside the Code with a smaller personal part, but the declaration should still describe that split truthfully, and if the personal part is the larger share the Code generally applies whatever the declaration says. Raise it before you sign, because it changes which lenders and which rules apply.
How long does a second mortgage take, and what holds it up?
There is no standard timeline for a second mortgage in Australia, because the date is set by whichever step finishes last, and that is rarely the lender's credit decision. Published timeframes run from same day to several weeks because each one assumes a different set of these steps is already done.
| Step | Who has to act | What usually holds it up |
|---|---|---|
| Credit assessment | The incoming lender, usually through a broker | Missing documents, or a repayment plan that is described rather than evidenced |
| Valuation | The lender's own valuer | Access to the property, and a report ordered by someone else that the lender cannot rely on |
| First mortgagee consent | Your existing lender | A request sent through a branch rather than the team that handles consents, or a first mortgage that secures more than one property |
| Title control and registration | Whoever controls the electronic title, and the state titles office | In Victoria the first mortgagee usually controls the electronic title and has to nominate it before the second mortgage can be lodged |
| Loan documents and legal advice | The lender's solicitor, your solicitor and any guarantor | Directors or guarantors unavailable to sign, or a trust or company whose signing authority nobody has checked |
Start the consent request and the title check at the same time as the credit assessment, not after it. On a Victorian property, who controls your title sets the date more often than the lender does.
Consent, valuation and your own solicitor
Priority itself does not change with the class of lender, but the consent process does, because each class accepts different paperwork and moves at a different speed.
An institutional lender wants the paperwork complete before it will settle, which usually means a formal deed and a process run to a standard. A private lender is more likely to work with whatever the first mortgagee will actually sign, and to move quickly once it has it. A fund's responsible entity applies its own policy, which is written for the investors rather than for the transaction. Those are differences in process and timing, not in law, and the mechanics of the consent itself are set out in whether your bank will consent to a second mortgage and in the parent guide. What to take from this page is narrower: when you choose a class, you are also choosing how that conversation will be run.
If your first lender refuses consent, the deal usually has to change shape rather than push harder: a different property as security, a caveat for a short and clearly dated need, compared in second mortgage against caveat loan, or refinancing the first mortgage so a single lender holds the whole position.
Two more steps sit between the offer and the money. The lender will order its own valuation, and the Australian Property Institute's guidance on valuations for mortgage and loan security purposes (ANZVGP 112) means another party cannot rely on a valuation until the valuer consents in writing, while a valuer instructed by the borrower should disclose that in the report. That is why a valuation you commissioned yourself is rarely one a new lender will use. Many lenders also want your own solicitor to explain the documents to you, and to any guarantor, before settlement, often with a signed certificate that the advice was given. Book that appointment early, because it can sit on the critical path too.
If the loan is not repaid by the end of the term
A second mortgage that reaches the end of its term unpaid is in default, which usually brings default interest under the contract and, if it is not resolved, a move toward enforcement. For a registered mortgage that normally means the lender exercising its power of sale after giving the notice the state's property law requires. In Queensland that regime now sits in the Property Law Act 2023, which replaced the 1974 Act from 1 August 2025, so older material quoting the 1974 Act may be out of date.
A second lender can enforce its own mortgage, but it still ranks behind the first, so the first lender's debt is repaid from any sale before the second lender recovers anything, and in practice the two lenders have to deal with each other. Until the lender has signed a contract to sell, you can generally still stop the process by paying the loan out in full, which is why a refinance or an extension agreed before the term ends is worth far more than one chased after default. Notice periods and steps differ between states, so get legal advice on your state's rules before relying on any timetable. If a lender has already moved to take possession or sell, get legal advice straight away; ASIC's guidance on commercial loan disputes urges borrowers not to leave it too late.
Which type of second mortgage lender fits your situation?
The type of lender that fits usually depends on three things: where your first mortgage sits, how firm your repayment plan is, and whether the need is one-off or ongoing. Matching your situation to a class is a better use of your time than ranking lenders, because the class decides the shape of the answer before any individual lender looks at your file. Three situations come up constantly, each resolved to a class rather than to a name or a price. Where the security is commercial property, the lender pool and the questions change again, set out in a second mortgage on commercial property.
Where the existing loan and the operating accounts sit with the same institution, the first move is usually back to that institution, because a further advance behind its own security avoids the consent conversation entirely. If it declines, the request has changed shape: it is now a request for a lender that will rank behind that bank, which moves you to the non-bank or private classes and makes first mortgagee consent the critical path rather than a formality.
A short, defined period with a documented way out is the situation privately funded lenders are built for, because the certainty they are pricing is the exit rather than the trading history. The trade is speed against cost and against a term that will not stretch far. Where the security or the timeframe makes a mortgage impractical, the comparison worth making is the one in second mortgage against caveat loan.
Second-ranking security is a poor fit for a recurring need, whichever class writes it, because the terms are generally short and the costs are front-loaded. The honest answer here is often that the borrowing should be structured differently, and the question of whether to approach a lender directly or through a broker is a separate one again, covered in going direct against arranging a second mortgage.
From our broking, indicative
These are qualitative observations from placing second-ranking files across the non-bank, private and fund classes, as at September 2026. They describe patterns we see, not outcomes you should expect, and this page deliberately carries no rate, cost or approval figure of any kind.
- Speed is a consequence of funding structure, not of service. The classes that can answer fastest are the ones where the decision-maker and the money are the same party, which is why private funding tends to move first and institutional funding tends to move last.
- What each class wants to see first differs predictably. Institutionally funded lenders open with the cashflow that services the interest. Privately funded lenders open with the property, the first mortgage position and the way out. Funds open with whatever their mandate to investors requires them to open with.
- The most common reason a second-ranking application does not proceed is not the borrower and not the property. It is the first mortgagee, either because consent is refused or because the process outruns the deadline the borrowing was meant to meet.
Indicative only, based on deals we have placed, not a quote or an offer. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
If you are trying to work out which class fits, that is a conversation rather than a search. A broker who places behind first mortgages regularly can usually place you on the map in one call, and the second mortgage loans page sets out how Switchboard approaches it.
Second mortgages in Australia are written by a small number of recognisable classes, and the class is the thing worth identifying. Banks and other authorised deposit-taking institutions do it rarely, and usually only behind their own first mortgage. Non-bank lenders write them off wholesale funding lines, so their appetite follows their funder. Private lenders write them off their own and their investors' balance sheets, which is why they are faster and why the protections sit in the documents. Mortgage funds split in two: pooled schemes are benchmarked toward first mortgages and have to explain any departure, while contributory schemes are the structure that can sit behind one. No Australian regulator, statistics agency or industry body publishes a list of any of them, so the checks that matter are the ones you run yourself: who the lender really is, what the offer costs once fees and held-back interest are counted, and whether your first lender will consent in time.
Key takeaway: identify the class before you compare the offer, because the class decides the rulebook, the speed and the shape of the loan long before any individual lender does.Frequently Asked Questions
Sometimes, and almost always behind its own first mortgage rather than another lender's. A bank is a deposit-taking institution that has to hold capital against every exposure and manage it inside a credit risk framework, so ranking behind a lender it does not control is a position it rarely takes. Where the first mortgage is already with that bank, the same request is usually handled as a further advance instead. If it is not, a second mortgage loan from another class is the usual route.
A non-bank lender is a lender that does not take deposits, so it funds its loan book from wholesale funding lines, securitisation and investor money instead. That single fact is the definition, and it is what the term is doing when a broker uses it. It does not tell you the lender is small, expensive or unlicensed.
In Australia the non-bank class runs from large securitised lenders writing prime residential and commercial loans through to specialist funders that write only short-term, property-secured business loans. They are not supervised by the Australian Prudential Regulation Authority (APRA) because they hold no deposits, and they are supervised for conduct by the Australian Securities and Investments Commission (ASIC). The class is wide enough that naming it tells you how the lender is funded, not how it will price or assess your file.
Yes. A private lender takes no deposits, so it is also a non-bank lender; the two labels describe different things rather than different groups. Non-bank says the lender is outside the deposit-taking system, while private says where the money comes from. The Reserve Bank describes private credit as a form of non-bank lending, typically run by asset managers and funded by investors.
Non-bank lenders are lawful and supervised for conduct, but a borrower is protected in a different way than with a bank. A non-bank lender is not prudentially supervised, so no capital regime stands behind it, and where your loan is wholly or predominantly for business purposes the consumer credit legislation generally does not apply either. What protects you instead is the loan documentation, the title system and the general law, which is why reading the security documents matters more on this class of loan than comparing brand names.
Yes. Private lending is lawful in Australia, and legal, licensed and supervised are three different questions. A private lender writing only business-purpose loans may lawfully operate without a credit licence, because ASIC's Regulatory Guide 203 makes the licensing question turn on whether the National Credit Code applies to the credit at all. That makes the absence of a licence uninformative on a business loan rather than a warning sign.
A mortgage fund raises money from investors and lends it out against real property, and where the fund is offered to retail investors a responsible entity operates it as a registered scheme. In a pooled fund the investors hold an interest across the whole loan book; in a contributory fund they choose the individual loans they are in. That difference decides which fund can realistically sit behind a first mortgage, because ASIC's benchmarks for pooled schemes point at first mortgages and do not frame contributory schemes the same way.
No Australian regulator publishes a register of reputable second mortgage lenders, so the useful answer is a method rather than a list. Establish which class the lender belongs to, then run the checks that class can be run on: its licence or scheme registration on ASIC's professional registers where it holds one, its ABN on the Australian Business Register, whether it is a member of the Australian Financial Complaints Authority, and whether its loan documents match what its representative has told you. Call it on a number you find yourself, because scammers can quote real licence details. The private mortgage lender guide sets out how to run those checks on the class that most often comes up.
There is no best second mortgage, because second-ranking security is priced and approved case by case rather than off a shelf. The same property and the same borrower can produce different answers from two lenders in the same class, depending on the first mortgagee, the repayment plan at the end of the term and the funding line the lender is drawing on that month. Ranking lenders is the wrong frame; matching a class to your situation is the right one.
Usually not safely. Most first mortgage documents restrict you from giving security over the same property to anyone else without the first lender's consent, so arranging a second mortgage quietly can put you in breach of your first loan even where the second mortgage can still be registered. Whether the state titles office asks for the first lender's consent is a separate question that differs between states. The guide to whether your bank will consent to a second mortgage covers how that conversation normally runs.
Beyond the interest rate, a second mortgage offer commonly carries an establishment or lender fee, any broker fee, the lender's legal costs and a valuation fee, sometimes with prepaid or retained interest taken out of the advance, plus an extension fee and a higher default rate that apply only if the loan runs over or goes into default. No official schedule sets these and they vary by lender, so compare offers on the amount that reaches your account and the total you will repay, not on the headline rate.
Yes, if the loan goes into default and the required notices have been given, a second mortgage lender can generally exercise a power of sale, but it ranks behind the first mortgage, so the first lender is repaid from the sale before the second lender recovers anything. Until the lender has signed a contract to sell, you can generally stop the process by paying the loan out, so talk to the lender about an extension or a refinance before the term ends.
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