Second Mortgage Loans & Private Mortgage Brokers

 

Second Mortgages & Loans - Which lender is best?

There are various second mortgage lenders in Australia, including some of the major lenders. However, major lenders only use second mortgage guarantees when the security is held with another lender. Such as Mum and Dad using their home to help their children buy a house.

We provide specialist advice on second mortgages and short term business loans through private lenders. 

Finally, what determines the best private lender? There are a number of requirements that set them apart.

  • Interest Rates.
  • Speed of settlement.
  • Loan to value ratio - LVR.
  • Set up fees.

Firstly, let's look at the difference between caveat loans and second mortgages. Since the pricing difference between the two loan facility types can vary considerably. As such, second mortgage pricing usually being a cheaper alternative.

Main Uses For Second Mortgage Finance

Secured business loans have many uses perfectly suited to business requirements. Such as,

Business Management Purposes

  • Loan amount = loan to value ratio (LVR) of 75%
  • Obtain working capital to keep trading.
  • Plus, insufficient income evidence available.
  • Also, business restructuring. Such as, closing one income entity and establishing a new trading ABN and entity.
  • Hence, voluntary liquidation of a company. Therefore, needing the restructuring of overdrafts and business loans under a new entity. Consequently, the short term income won't fit the lending criteria of traditional lenders.
  • Repay the loan with a lump sum or monthly repayments

Bad Credit & Business Debt Purposes

  • Part or full payment of business debts. Such as outstanding invoices, business overdrafts or business loans.
  • Also, pay creditors to stop a business wind up
  • Plus, business loans to pay GST or tax debts
  • Then, money owed to creditors or suppliers.
  • Credit defaults preventing funds from traditional lenders.
  • Finally, to pay mortgage or rates arrears.

Speed and lender policy determines the most suitable solution

As tax debt is seen as a business problem which traditional lenders. Consequently, second mortgages are often used to pay a tax debt. Also, when an ato court judgement or ato bankruptcy is expected second mortgage & private finance is needed. In summary:

  • If speed is critical then caveat loans are a preferred option.
  • Second mortgage finance is preferred if traditional lending policies would not allow access to funds
  • First mortgage refinance is the preferred method of paying tax debt when time is available.

Loan Saver Network offers advice about second mortgage loans and private lenders to solve business debts. As such, contact our team for a free consultation on 1300 796 850.

Second mortgage loan pricing vs caveat loan pricing?

A second mortgage sits behind the first mortgage registered against the title of your property. Consequently, the initial mortgage remains on the title. Therefore, second mortgage finance allows access to equity in a property. Plus, without the need to  refinance the first mortgage

Use of Property Equity Example

Let's look at this example:

  • Home Value - $500 000
  • Minus what you owe - $100 000
  • = Equity - $400,000.

As such, private finance can access a portion of the $400,000. Consequently, by sitting without a need to refinance the home loan.

The first mortgage will have a priority interest. Consequently, if a lender forces the sale of a property, then the first mortgagee would be paid out first. As such, remaining funds would then be used to pay any other mortgages or caveats.

This form of private mortgage finance can be an effective method of obtaining funds. Especially when traditional finance is not possible because of tight policy guidelines. As such, private lender policies are more flexible than traditional lending. However, 2nd mortgage loans need to be practicable for the businesses requirement and purpose.

Second mortgages loans equity requirement?

Short term business loans such as caveat loans and second mortgage loans assume a higher risk for the lender. Because the income requirements are low or non-existent. As such, to reduce lender risk, they would require more equity.

Private lenders usually require 25% equity; or a maximum 75% LVR inclusive of fees and capitalised interest. In some cases loans can be provided without capitalising payments which provides you with more surplus. As such, the requirements would be a strong exit strategy along with your ability to meet payments.

Find Out More 1300796850

Second Mortgage Lending Criteria

The lending criteria for private lenders varies considerably with traditional finance. As such, businesses enjoy the simplicity of the loan process and lending criteria. Especially so if you need the funds urgently. See below of the lending criteria of second mortgage business finance:

  • Business Purpose only, Importantly, second mortgage finance must be for >50% business purpose only.
  • Secondly, income requirements, low doc income assessment or no doc depending on the lender and loan purpose. As such, these loans could be called asset loans.
  • Thirdly, short term and start up businesses ventures with 1 days ABN registration.
  • Also, tax debt payment and other business debt uses.
  • Importantly, some private lenders don’t require valuations
  • Credit defaults can be accepted.
  • No or insufficient income evidence available.
  • Finally, to pay mortgage or rates arrears.

Find Out More 1300796850

How Fast Can A Second Mortgage Be Settled

A second mortgage needs to be approved by the first mortgagee; which, at times can take as long as a refinance. Therefore, while waiting for the second mortgage to be approved, you can have access to the funds. Consequently, your funds are secured by caveat against the property title. This allows for extremely fast loan settlements.

  • 24 - 48 hour settlement is achievable. This is pending that all requirements met.

Summary of Second Mortgage Finance

  • Pay creditors to stop a business wind up
  • Business Restructuring. They can be used when closing one income entity and establishing a new trading ABN and entity.
  • Liquidation of a company. Such as business restructuring where overdrafts and business loans need closure or put under a new entity. Consequently, the short term income won't fit the lending criteria of traditional lenders.
  • Part or full payment of ATO debt. As such, the first mortgage refinance is the preferred method of funding ATO debt.
  • Fast settlements where complex lending policy would be a problem.
  • Traditional lenders are averse to risk such as legal proceedings. Consequently, business legal or court action is a suitable purpose.
  • Part or full payment of business debts such as outstanding invoices, business overdrafts or business loans.

Call Loan Saver Network on 1300 796 850 today for free debt advice. As such, we speacilise in second mortgages, caveat loans & resolving business debts so you can obtain the finance you need.

Let's talk about a solution that suits you

Second mortgage loans - are they risky?

Second mortgage loans are mostly used as business loans. As such, second mortgages have substantial benefits for a business requiring funds fast. However, you need to have a good exit strategy and plan to pay the funds back. Having said this, private loans such as this can provide great benefits for business.

  1. Firstly, you don’t fit the lending criteria of traditional or other lenders.
  2. Secondly, you need the funds urgently, and another more mainstream lending cannot provide funds in a sufficient time frame.

Some of the benefits of second mortgage business finance relate to the two points above which I will expand on:

Second Mortgage Lending Criteria

The criteria for specialised business finance is different from traditional lenders. As such, the private lending criteria is more flexible. Therefore, able to provide business funds where traditional finance would be declined.

  • Firstly, private second mortgage finance is for business purpose only.
  • Second, in most cases no income assessment is required.
  • Thirdly, suitable for start-up businesses – 1 day ABN registration.
  • 2nd mortgages have higher interest rates than traditinal lenders
  • Also, payment of tax debt and other business debts ok
  • 2nd mortgage equity lines of credit available
  • Fixed rate for the term of the business finance
  • Finally, no valuation required in some cases.

Find Out More 1300796850

Fast Settlement

A second mortgage needs to be approved by the first mortgagee which can take some time. Consequently, a caveat is usually lodged while negotiating with the first mortgagee. As such, once the caveat is lodged against the property title the funds are provided. Therefore, the loan starts as a caveat loan and ends with a second mortgage allowing for fast loan settlements.

  • 24-48 Hour settlement achievable – pending all requirements met.

Second Mortgage Finance in Summary

  • Pay creditors to stop a business wind up
  • Business Restructuring – closing one income entity and establishing a new trading ABN and entity.
  • Liquidation of a company requiring overdrafts and business loans to be paid out. As such, loans and debts need to be restructured under the new entity. Therefore, the short term nature of the new entity won't fit the lending criteria of traditional lenders.
  • Payment of ATO debt. As such, the first mortgage refinance to pay tax debt is the preferred method of paying the ATO debt.
  • However, second mortgages and private finance is preferred when traditional lending policies cannot be met.
  • Also, Caveat loans are preferred when speed is critical. Such as if there is a pending ato judgement or court proceeding and a refinance cannot be settled in time.
  • Part or full payment of business debts such as outstanding invoices, business overdrafts, business loans etc.
  • 75% LVR available inclusive of closing costs
  • Related Information on second mortgages.

Find Out More 1300796850

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