Second mortgage loans made for Melbourne
Specialised Second Mortgage Loans For Business
Getting a private second mortgage loan with Royce Stone Capital will ensure three things. Firstly, you'll get a tailored second mortgage loan made for your specific situation, on terms that suit you! Secondly, you'll have funds delivered to you urgently, using our unique methodology that gets rid of the red tape! Thirdly you'll have certainty of funding because of the wholesale capital (family offices and HNW investors) we work with. We will provide you with the certainty you deserve and the urgency you require.
- Settlement within 7 business days
- Loans up to $5M
- Low market rates
- Interest only loans or capitalised interest
- Higher LVRs than most second mortgage & caveat lenders.
- Accept various forms of property security.
For a confidential discussion, so you can thrive contact us here.
Non bank urgent funding, second mortgage loans
When To Use A Second Mortgage Loan
Second mortgage private loan serve as an optimal solution for short term loans. These loans are designed to provide immediate capital injections for urgent situations. Be free from the constraints of traditional banking and the requirements of having to refinance a first mortgage to get access to greater amounts of equity. Examples of when to use a second mortgage loan are:
- The cost of a short term second mortgage combined with a first mortgage bank loan is cheaper than refinancing with a private first mortgage loan.
- The inconvenience solved or the return on funds of the second mortgage loan is greater than the cost.
- The bank is reluctant to give you extra funds and expand current facilities, or not in a timely fashion that meets your requirements.
- When you want a capital partner that will back you and give you capital certainty.
Work with us, if you want a coaligned capital partner to help you get ahead!
How to get a second mortgage loan
Application Process For Your Second Mortgage Loan
At Royce Stone Capital because of the family offices, wholesale funds and our own funds that we use, we have a unique methodology of providing second mortgage loans that keeps the process simple. Our initial DD is comprised of the below.
- Our partners conduct an internal valuation (9 times out of 10, external valuations aren't required, thus saving you time and money.
- We require a borrowing entity usually a company or trust.
- We require the first mortgage statement and loan document.
- We require a copy of your ID.
- We require an exit plan (how you will repay the funds) and what the funds will be used for.
- We don’t require a deed of priority as most other lenders do, saving you time and money.
The benefits of a second mortgage loan
Advantages of Second Mortgage Finance With Royce Stone Capital
Getting a second mortgage private finance solution with Royce Stone capital, means you get the flexibility and urgent funds you require to succeed. Whether it is for a business cashflow, refinance, investment or property development purposes, you can move forward with confidence.
- Use funds to get you out of cashflow problems.
- Use the funds to invest into a business opportunity.
- Cross collateralise your security, to release equity and do property development or renovations for commercial reasons.
- You'll have a capital partners that will want you to win, and have access to an exclusive network of family offices and HNW investors.
Work with us today, if you want capital partners that understand you!
Why can't banks offer a second mortgage?
Banks rarely do second mortgage loans, and this is in a large part due to the risk profile they are willing to take on. Secondly, most borrowers that require a second mortgage loan, usually don't meet bank serviceability requirements, or the bank is unable to provide funding on time.
Unfortunately, when businesses need funding the most and are in critical situations, banks more often than not, will not be there to help, as a the client doesn't meet their serviceability requirements.
Banks in certain instances can provide a second mortgage, and typically it is in the form of a cross collateralised loan. This is where they take equity out of one asset and use it as an equity contribution towards the purchase of another asset, then take both assets as security.
How much can you borrow with a second mortgage?
This largely depends on the equity available in your property that you are using as security. As a rule of thumb, the combined first mortgage and second mortgage including fees, cannot go above 80%LVR of the property value.
For example, if you have a property worth $1M, a bank loan of $500k. The second mortgage cannot be more than $300k including fees. As the total LVR would be 80% with the two facilities combined.
The reason lenders only go up to 80% combined, is this reduces the risk exposure for them leaving a 20% buffer should the borrower go into default, or if property prices were to drop in value.
What is the eligibility criteria for a second mortgage?
For a private second mortgage loan you must be borrowing for business or investment purposes only. This means you will be required to have a business entity or trust that is the borrowing entity. You must also have a property with sufficient equity for the required borrowing amount, and an exit strategy that aims to repay the loan within 18 months (max loan term is 18 months).
Typically on maturity most borrowers will refinance the second mortgage loan with a combined first mortgage with a bank when their situation improves, or will sell the asset / project that the funds were used for.
What are my alternatives to a second mortgage loan?
This largely depends on how much money you need, and what other assets you may have. We are one of the few to do heritage plate lending, and lending against alternative assets.
However, if property is the only asset you wish to borrow against, then an alternative strategy to getting a second mortgage loan may be to refinance the first mortgage and second mortgage component together, as one private first mortgage loan.
For longer term loans and larger quantum’s this is often a better solution.
A calculation should be done, as to which scenario is better for you.
What are second mortgage loan rates?
Rates for second mortgage loans vary based on a number of factors, such as the loan amount, the LVR of the deal, loan duration, the underlying asset class (residential property vs commercial property), the quality of the borrower and the exit strategy (refinance, sale, presales etc).
Generally speaking, because second mortgages carry more risk for the second mortgage lender than the first mortgage holder, pricing is more expensive. Interest rates can vary from 17% p.a up to 26% p.a depending on a number of factors. At Royce Stone Capital we try to de-risk the deal for all parties invovled to reduce pricing for borrowers and to ensure an exit for the capital partners we work with (internal and external).
We are able to facilitate transactions that most second mortgage lenders can't do as we can source capital that can go up to 82% LVR, in time frames that most will never meet due to our speical processes.
Speak with us today to solve your immediate needs!
Do second mortgage loans affect your credit score?
The short answer is our second mortgage loans do not affect your credit score!
The only time a second mortgage loan will affect your credit score, is if the loan goes bad, you have purposely not repaid funds or have committed fraud, and litigation proceedings have had to take place to legally enforce lender rights.
We work with you to ensure that even if you can't repay a loan for whatever genuine reason, an exit strategy is put together, and everything is done to make things as amicable as possible for all parties involved. We are not in the business of vulture private lending!
Most of our private loans do not require a credit check or financials, as they are focused on business and investment exits.
Second mortgage loan vs home equity loan?
A second mortgage loan can help release the equity you have in your personal or business assets, to release funds for business purposes. Working with us, means we will carefully engineer a loan to suit your requirements, to make sure your second mortgage loan helps you to get ahead financially or gets you out of a difficult situation.
Speak with us today to get an immediate second mortgage loan.
How much can you borrow on a second mortgage loan?
How much you can borrow on a second mortgage loan will depend on the available equity in your property, The LVR of the lender and the value of the property. The equity available in your property is determined by the delta between the market price and any debt you have on that property. The higher the market value of your property, the more you can borrow as a dollar figure.
For example, if you have a property worth $1M, with $500,000 of bank debt. This means you have $500,000 of equity available in your property. If the lender offers 80% LVR as we do for our second mortgages, this means you can borrow up to $800,000. So your gross loan amount will be $800,000 minus the first mortgage debt of $500,000. Meaning your second mortgage will be $300,000.
Is a second mortgage loan a good idea?
As second mortgage loans are more riskier than a first mortgage private loan, and as such are more expensive. A second mortgage loan should only be used for short periods of time, typically 3 months to a year. Second mortgage loans should only be used in certain circumstances. We've provided a few examples for you below.
1. Where the blended cost of capital of a bank first mortgage loan and private second mortgage loan, is cheaper, than if you refinanced the whole debt as a private loan.
2. Where you only need a smaller amount of money, for a short period of time.
3. Where you wish to keep the lower rates of your bank facility, and do not wish to break your existing bank facility.
4. Where you have bank facility, and do not meet their servicability requirements to borrow more.
5. Where the bank can't provide you with the immediate funds you need.
