Second mortgages that are tailored and delivered urgently!

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.

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.

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.

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.

Second mortgage rates for second mortgages 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. Second mortgage 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 involved to reduce pricing for borrowers and to ensure there is a strong exit for the capital partners we work with (internal and external). By doing this we reduce the deal risk and the associates second mortgage rates charged to borrowers.

Reducing second mortgage rates, ultimately comes down to your ability to reduce the LVR as much as possible and ensure you can demonstrate that a strong exit will be there for the lender to get their money back. This can include the sale of property, having a refinance solution lined up or profits from a business transaction. Most second mortgage private lenders, are willing to provide competitive second mortgage rates, if they can see the capital is being put to genuine business use.

Second mortgages are used for short term lending, and in some instances 2 year loans. They are seldom used beyond 2 years. Most private second mortgage lenders want to be in and out of deals within 12 months.

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 unique processes.

Speak with us today to solve your immediate needs!

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.

Speak with us today to get an immediate funding solution!

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 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.

To discuss your next second mortgage loan, contact us here.

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.

A second mortgage loan is a loan that ranks behind the security position of a bank or another lender who has the senior debt position (the first ranked position).

A second mortgage loan is typically taken when the first mortgage lender won’t provide more funds to the borrower, due to loan LVR restrictions or serviceability requirements like those of a bank. Alternatively, the first mortgage lender may be unable to provide funding in time to meet the needs of the borrower.

Because second mortgage loans are ranked behind the senior lender, they carry more risk for the second mortgage lender. As such they are priced higher.

Second mortgages are a great way to get business funding quicker, and to unlock the equity in your property without the headaches of a bank. Second mortgages are typically used for 3 months and up to 2 years in some instances, but most usually go for 12 months.

Whether you need urgent business funding, are doing a property development or need the capital to take advantage of an investment opportunity, our solutions will help get you to where you want to be.

Speak to us today for your next second mortgage loan.