Can I use equity from my existing property to fund a house flip?

Yes, if there is sufficient usable equity in your existing property, it may be possible to release funds through a second mortgage or equity release structure. These funds can then be used toward deposit, acquisition costs or renovation works on the next property.

Can house flipping finance be arranged through a company or trust?

Yes, many non-consumer property transactions are structured through a company or trust, depending on the borrower’s strategy and advice from their accountant or solicitor. The correct structure should be confirmed before entering into the purchase.

How quickly can house flipping loans be arranged?

Indicative terms can often be provided within 24 to 72 hours, with settlement time depending on valuation, legal documentation and the complexity of the transaction.

What do lenders look at when assessing a house flipping loan?

Lenders generally assess the security property, loan-to-value ratio, available equity, transaction structure and the proposed exit strategy. A clear and realistic exit strategy is one of the most important factors in securing approval.

House Flipping Loans Australia

Q: How do you fund a house flip in Australia?

Many house flips in Australia are funded using a combination of a second mortgage to release equity from an existing property and a first mortgage to fund the new purchase. This structure allows borrowers to access capital quickly and complete short-term property transactions.

Q: What is the difference between a first mortgage and a second mortgage for house flipping?

A first mortgage is the primary loan secured against the property being purchased. A second mortgage sits behind an existing first mortgage on a property you already own and is commonly used to release equity. In many house flipping scenarios, both are used together.

How to Secure Funding Using First and Second Mortgages

House flipping in Australia is not limited by opportunity it is limited by access to capital. The difference between investors who consistently secure deals and those who miss them comes down to one thing: their ability to structure funding quickly and correctly.

At Innovate Funding, we specialise in structuring short-term, property-backed loans that allow investors to unlock equity, acquire property, and execute a defined exit strategy. This is typically achieved through a combination of Second Mortgage Loans (to release equity) and First Mortgage Loans (to fund the purchase).

How Property Flips Are Actually Funded

Most property flipping transactions are not funded with cash savings. Instead, they are structured using existing property as leverage.

In practice, this means an investor will:

Release equity from a property they already own
Use that equity to cover deposit and costs
Secure a first mortgage against the new property to complete the purchase

This structure allows investors to act quickly, preserve liquidity, and scale over multiple transactions.

Releasing Equity: The Role of a Second Mortgage (Non consumer only)

The first step in most house flipping scenarios is accessing usable capital. Rather than refinancing an existing loan, many investors use a Second Mortgage Loan, which sits behind the current lender and allows additional funds to be raised against the same property. This model only works if the loan purpose is non-consumer. An example of this would be purchasing a property in a company or trust entity. Pulling equity out of an existing asset, to assist with the new purchase.

This approach is particularly effective where timing is critical, as it avoids the delays associated with traditional refinancing.

From a lender’s perspective, the key consideration is the combined loan-to-value ratio (LVR) across both the first and second mortgage.

A Realistic Example

Consider an investor who owns a residential property valued at $1,200,000 with an existing first mortgage of $200,000. A private lender may allow total lending up to 65% of the property’s value, equating to $780,000.

This means the available equity is approximately $580,000. (65% of $1,200,000 minus existing debt)

In this scenario, a Second Mortgage Loan could be structured to release that up to $580,000, which can then be used toward:

Deposit on the new purchase
Stamp duty and acquisition costs
Initial renovation works

Importantly, lenders assess this on a gross exposure basis, meaning any fees and capitalised interest are included in the total loan amount when calculating LVR.

Funding the Purchase: First Mortgage Lending

Once equity has been released, the next step is securing the property itself. This is typically done through a First Mortgage Loan on the new purchase, which forms the primary layer of funding.

Unlike traditional bank lending, private first mortgages are structured around the value of the asset, the strength of the deal, and the clarity of the exit strategy, rather than purely on income and servicing metrics.

In a house flipping context, this allows for short-term funding aligned with the intended sale of the property.

Why This Structure Works

When combined, Second Mortgage Loans and First Mortgage Loans create a complete funding solution.

The second mortgage provides speed and flexibility, allowing the investor to access capital without disrupting their existing loan.

The first mortgage provides the bulk of the funding required to complete the acquisition.Together, they enable investors to move quickly, which is often the deciding factor in competitive property transactions.

What Determines Whether a Deal Gets Approved

Private lending is fundamentally different to traditional lending. Approval is not driven by income multiples, but by the strength of the transaction itself. The most important factor is the exit strategy.

Lenders need to clearly understand how the loan will be repaid, whether through the sale of the property after renovation or a refinance onto a longer-term facility.

Closely linked to this is the feasibility of the deal. This includes the purchase price, renovation costs, and the expected end value. If the numbers do not support a clear margin, the transaction becomes difficult to fund.

The overall LVR also plays a critical role. Lower leverage generally results in stronger terms and a higher likelihood of approval. Finally, the quality and location of the security property will influence both appetite and turnaround time.

Consumer vs Non-Consumer Lending in Property Flipping

One of the most misunderstood aspects of house flipping finance in Australia is how loans are classified.

This distinction is critical because it determines how the loan is assessed and structured.

Consumer lending applies where funds are used for personal or domestic purposes, such as owner-occupied housing. These loans are first mortgage loans only and are heavily regulated. While consumer products such as Bridging Loans or equity release facilities may be available, they are not always guaranteed, and extensive assessment will be conducted, pending valuations, credit history and exit strategy.

In contrast, most house flipping transactions fall under non-consumer (business-purpose) lending, (company/ trust structures). This applies where the borrower’s intention is to acquire, improve, and sell property for profit. In these cases, the loan is assessed based on the asset, the transaction, and the exit strategy. This is why many investors utilise Equity Release Loans and structured lending solutions to access capital efficiently.

Why Traditional Banks Are Not Used for House Flipping

Traditional lenders are designed for long-term residential lending, not short-term, transaction-driven strategies.

They rely heavily on income verification, servicing calculations, and extended approval timeframes.

In a house flipping scenario, this creates two major issues: speed and flexibility. Private lending addresses both by focusing on the asset and the exit strategy, allowing transactions to proceed within timeframes that align with real-world property deals.

Why Investors Work with Innovate Funding

At Innovate Funding, our role is not simply to provide access to capital, but to structure transactions in a way that allows them to proceed.

We work with investors to:

Assess available equity
Structure Second Mortgage Loans
Arrange First Mortgage Loans
Provide guidance on Bridging Loans where required

Our focus is on execution, ensuring that when an opportunity arises, funding is not the limiting factor.

FAQs about Flipping Houses

How do you fund a house flip in Australia?

Most property flips in Australia are funded using a combination of Second Mortgage Loans to release equity from an existing property, and First Mortgage Loans secured against the new purchase. This allows investors to access capital quickly without needing to sell their current assets.

Can I flip a house without using my own cash?

Yes, provided you have sufficient equity in an existing property. Many investors use Equity Release Loans or second mortgages to fund deposits, stamp duty, and renovation costs, while a first mortgage is used to complete the purchase.

What is the difference between a first mortgage and a second mortgage?

A First Mortgage Loan is the primary loan secured against a property being purchased. A Second Mortgage Loan sits behind an existing loan and allows you to release equity from a property you already own. Both are commonly used together to fund property flips.

How much can I borrow for a property flip?

This depends on the lender and the strength of the deal. Typically, private lenders will allow up to around 65% LVR on a first mortgage and up to 70–75% combined LVR when including a second mortgage. The final amount will depend on the property value, existing debt, and exit strategy.

How quickly can I get funding approved?

Indicative approvals are typically provided within 24–72 hours. Settlement timeframes depend on valuation, legal documentation, and the complexity of the transaction, but private lending is significantly faster than traditional bank lending.

Do I need income or payslips to qualify?

Private lending is primarily asset-based, meaning lenders focus on the property and the exit strategy rather than PAYG income. However, the transaction must still be commercially viable with a clear plan for repayment.

Can I use a bridging loan to flip a property?

Bridging Loans can be used in certain scenarios, particularly where you are buying a property before selling another. However, most house flipping transactions are structured using first and second mortgages due to greater flexibility and suitability for short-term projects.

Should I buy the property in my personal name or a company/trust?

Many property flips are structured through companies or trusts for tax and asset protection reasons. However, the correct structure depends on your personal circumstances and should be confirmed with an accountant before proceeding.

Is house flipping considered a business in Australia?

In many cases, yes. If you are buying property with the intention to renovate and sell for profit, the Australian Taxation Office may treat this as a business activity, meaning profits could be taxed as income rather than capital gains.

What is the most important factor in getting approved?

The most important factor is the exit strategy. Lenders need to clearly understand how the loan will be repaid, whether through the sale of the property or refinance. A strong, realistic exit strategy significantly increases the likelihood of approval.

What is the best loan structure for house flipping?

The most common structure is a combination of a Second Mortgage Loan to release equity and a First Mortgage Loan to fund the purchase. This allows investors to maximise leverage while maintaining speed and flexibility.

Can I refinance after flipping instead of selling?

Yes, if the property has increased in value and meets lender criteria, refinancing may be an option. However, most private lending for house flipping is structured with a sale as the primary exit strategy.