$450K Second Mortgage Everton Hills QLD: Completing a Second Property in a Company Name

A Queensland company needed $450,000 to complete the purchase of a second property and the bank holding its existing mortgage could not move inside the settlement window. Innovate Funding arranged a $450,000 registered second mortgage behind the major bank first mortgage on the company's Everton Hills property, at a 65% combined loan-to-value ratio, 1.25% per month, over a nine-month term. The loan is repaid when the new property is sold.

This one was funded through one of our lending partners rather than from our own capital. We told the borrower that before terms were issued, and we structured, negotiated and ran the deal through to settlement.

How this Everton Hills second mortgage was structured

Loan details	Confirmed transaction
Security location	Everton Hills, QLD
Borrower	Company (business purpose)
Loan amount	$450,000
Loan type	Registered second mortgage
Existing first mortgage	Major bank
Combined LVR	65%
Interest rate	1.25% per month
Loan term	9 months
Loan purpose	Complete the purchase of another property
Exit strategy	Sale of the new property
Funding source	Arranged through an Innovate Funding lending partner

The problem: a settlement date the bank could not meet

The company had exchanged on a second property and needed to complete. The shortfall was $450,000. The obvious route, a top-up or refinance with the bank that already held the first mortgage on the Everton Hills property, would have meant a fresh credit assessment, updated company financials, serviceability on both properties and a timeline measured in weeks. The contract did not allow for that.

Refinancing the whole first mortgage to a private lender would have solved the timing but priced the entire existing debt at private rates for nine months. That is an expensive way to borrow $450,000. The cheaper structure was to leave the bank loan alone and register a second mortgage behind it for the shortfall only.

Why 65% combined LVR got this deal done

Combined LVR is the bank's balance plus the new second mortgage, divided by the value of the Everton Hills property. At 65% there was a clear equity buffer above the lender's exposure, which is what let the partner lender price the facility at 1.25% per month rather than the 1.5% to 2% range that higher-leverage or weaker-exit second mortgages attract.

Two other things helped. The first mortgage was with a major bank, so the priority position was straightforward to assess. And the exit was a sale of a specific property, not a hoped-for refinance, which gives a lender a defined repayment event to underwrite against.

Borrowing in a company name

The borrower here was a company, and the funds were used to complete a property purchase in that company. That is a business-purpose loan and it sits outside the National Credit Code, which is the only kind of lending Innovate Funding does. We still confirm the purpose before issuing indicative terms, because security over a property does not by itself make a loan business-purpose. The borrower and the actual use of funds decide that.

Company borrowers should expect the lender to ask for director guarantees, the company's ASIC extract and the contract for the property being purchased. If the security property or the new property is held in a different entity to the one borrowing, say so at the enquiry stage. Cross-entity security is workable, but it changes the documents and the time it takes to settle.

What 1.25% per month costs over nine months

1.25% per month is 15% per annum on a simple nominal basis. On $450,000 that is $5,625 a month, or $50,625 of interest over the full nine-month term if the loan runs to maturity. Establishment, legal and valuation costs sit on top of that, and if interest is capitalised rather than paid monthly the balance it accrues on rises over the term. Treat the $50,625 as an illustration of the rate, not the confirmed interest on this transaction.

The comparison that matters is not 15% against a bank rate. It is the cost of nine months of private money on $450,000 against the cost of losing the deposit and the property. For a borrower who intends to sell within the term, the interest is a transaction cost of the acquisition. Our second mortgage rates guide covers where 1.25% sits in the current market and what moves a rate up or down.

The exit: sale of the new property

The nine-month term was set around the sale, not the other way round. It allows for the purchase to complete, the property to be prepared and marketed, a contract to be signed and a normal Queensland settlement period to run. A six-month term would have looked cheaper on paper and left no room for a slow campaign.

A sale exit carries a specific risk the borrower needs to price in: the market decides the timing, not the borrower. If the property has not sold by month nine, the options are an extension (at the lender's discretion and usually at a cost), a refinance, or a sale at a price the borrower did not want. Lenders ask for a realistic sale price supported by comparable sales, not the figure the borrower hopes for, because net sale proceeds after agent fees, legal costs and the first mortgage payout must clear the second mortgage with room to spare.

Bank consent on a Queensland second mortgage

Queensland is one of the easier states for a second mortgage behind a bank. Section 125 of the Property Law Act 2023 provides that granting a subsequent mortgage does not of itself breach the first mortgage, even where the bank's loan terms say otherwise. That does not remove the lender's own requirements: most partner lenders still want the bank's consent or a deed of priority, and the bank's turnaround on that is usually the longest single step. We request it the day indicative terms are accepted. Our guide to deeds of priority for second mortgages explains what the deed does and what to do if the bank will not sign.

Completing a property purchase with a second mortgage

If your company has exchanged on a property, has equity in another one with a bank mortgage on it, and the bank cannot fund the shortfall in time, send us:

• Address and estimated value of the security property, and the name of the bank and its current balance

• The contract for the property being purchased, including the settlement date

• The amount required at settlement and how it was calculated

• The entity buying and the entity that owns the security property

• Your intended exit: sale (with the expected price and timing) or refinance

• Any consent request already made to the bank

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We generally give indicative feedback within 24 to 48 hours of receiving that information. We fund suitable loans from our own capital and arrange the rest, like this one, through private and non-bank lending partners in Queensland and across Australia. We tell you which applies before you commit. Submit your scenario or call 02 8919 3639.

Innovate Funding provides business-purpose loans only and does not offer consumer loans. All facilities are subject to assessment, valuation, legal due diligence and lender approval. Figures above are from a settled transaction, anonymised with the borrower's permission; the interest calculation is illustrative only.