Second mortgage calculator
Maximum second mortgage at this limit
–
An estimate to help you plan, not an offer or approval. Lenders set their own policies, costs and limits.
Quick answer
This second mortgage calculator uses your property value, first mortgage balance and the amount you want to work out the largest second mortgage available at a combined LVR limit you choose, from 50% to 85%. It also shows the combined LVR with your amount, how much headroom is left, and whether the loan would sit behind a first lender. No interest rates are assumed.
Key points
- Each 5-point step in the combined limit is worth 5% of the property's value
- Use your first mortgage limit, not just the balance, if redraw is available
- Negative headroom means your amount is above the limit you're testing
- With no first mortgage, you'd be looking at a first mortgage, usually the cheaper route
Plenty of business owners have more equity in their property than they realise, and plenty more assume they can borrow against all of it. Neither is quite right. A second mortgage lender will lend up to a combined limit: existing debt plus new borrowing, measured against what the property is worth. Everything in this calculator flows from that one idea.
Enter four numbers and you’ll see the largest second mortgage your property could carry at the limit you choose, whether your amount fits, and how much room is left.
Inputs: what the calculator asks for
Property value. What the property would realistically sell for today. Lenders will order a valuation, and valuers tend to be conservative, so a figure based on recent nearby sales is better than an online estimate or the agent’s most optimistic appraisal.
First mortgage balance. What you owe on the existing loan. One trap here: if your home loan has redraw available, some second mortgage lenders count the full limit rather than the current balance, because you could draw it back at any time. If in doubt, enter the higher figure.
Second mortgage amount wanted. The sum the business actually needs.
Combined LVR limit to test. A slider from 50% to 85% in 5-point steps. Each lender sets its own ceiling depending on the property and the deal, so move it around and watch how the answer shifts.
Outputs: the four numbers that come back
- Maximum second mortgage at this limit. Property value multiplied by the limit, minus the first mortgage balance. If the first mortgage already uses up the whole limit, this shows $0.
- Combined LVR with your amount. The first mortgage plus your requested amount, as a percentage of the property value. This is the figure a lender’s credit team will look at. The LVR calculator explains the ratio in more depth.
- Headroom left. The maximum minus your amount. A positive figure means room to spare. A negative figure (shown with a minus sign) means your amount sits above the limit you’re testing.
- Position. “Second mortgage behind the first lender” whenever an existing loan is entered. Leave that field at zero and it tells you this would actually be a first mortgage, which is worth knowing because first-ranking loans are generally cheaper and easier to arrange.
A note under the results confirms whether your amount fits. If it doesn’t, it suggests trying a lower amount, another property, or refinancing the first mortgage into one larger loan.
Worked example: one property, every limit (illustrative)
A plumbing business owner owns a family home valued at $1,350,000 with $720,000 left on the home loan. They want $180,000 to buy out a retiring partner’s share of the business.
Their combined LVR with the new loan would be ($720,000 + $180,000) ÷ $1,350,000 = 66.7%. Here’s how the maximum moves as they slide the limit:
| Combined limit | Maximum second mortgage | Headroom against $180,000 |
|---|---|---|
| 50% | $0 | -$180,000 |
| 55% | $22,500 | -$157,500 |
| 60% | $90,000 | -$90,000 |
| 65% | $157,500 | -$22,500 |
| 70% | $225,000 | $45,000 |
| 75% | $292,500 | $112,500 |
| 80% | $360,000 | $180,000 |
Notice that every 5-point step adds the same $67,500, which is 5% of the property’s value. The first mortgage balance doesn’t change that; it only decides where the starting line is. The practical takeaway: the owner needs a lender comfortable at roughly 67% or above. At 65% they’d be about $22,500 short, and the calculator would say so.
That makes the case for a little flexibility. Borrowing $155,000 instead of $180,000 would bring the request under a 65% ceiling, and the remaining $25,000 might come from cash flow or a short equipment finance arrangement for the van the partner is taking with them. Our guide to buying out a business partner covers how lenders view this kind of deal.
Curious about the limit your property is likely to attract, start a quick enquiry. Asking is free, and no credit enquiry gets recorded against you.
What if nothing is owed on the property?
A transport operator owns a small industrial unit outright, valued at $800,000, and enters $0 as the first mortgage balance. At a 60% limit, the calculator shows a maximum of $480,000, and the position reads “No first mortgage: this would be a first mortgage”.
That message matters. With nothing ahead of the new lender, the loan ranks first on title. The first vs second mortgage business loans comparison explains why that usually means a lower total cost and more lenders willing to look. Commercial and industrial property often attracts a lower limit than a house, so testing at 55% or 60% is a sensible start.
What the calculator doesn’t cover
Your first lender’s position. Whether a second mortgage needs your first lender’s consent depends on your state and your loan contract. In some states it can be registered without consent, in others the first lender’s agreement or the production of title by the first mortgagee is part of the process. The order in which mortgages rank, and how that order can be changed, is set by each state’s land titles office. The NSW Registrar General’s guidelines on priority between mortgages are a good example of how formal this is.
Topping up an existing mortgage. It’s tempting to think you can just increase your current loan. In Western Australia, Landgate’s guide on mortgage extensions makes it clear the principal sum can’t be increased by extending a mortgage: a larger sum needs a further mortgage. Other states have their own processes, but the lesson is the same. Extra money against the property usually means new documents and a new registered interest.
Cost, term and exit. The calculator deals with equity, not price. Get each lender to put its full dollar cost for your expected term in writing, and use the loan cost comparison calculator to compare quotes. Second mortgage lenders will also ask how you plan to repay: from business cash flow, a refinance, or a sale.
Bank alternatives. If your bank will refinance the whole lot into one bigger home or business loan, that’s often the cheapest money available and worth pursuing first. A second mortgage comes into its own when the bank says no, when your existing home loan has a great deal you don’t want to break, or when the timing is too tight for a full refinance. Our page on business loans against your home walks through the options. Private lenders that fund second mortgages for business purposes include our own brand, HomeSec Business Finance.
Related calculators
- Property equity calculator: usable equity across residential, commercial and rural property.
- Caveat loan calculator: a shorter, faster option behind your mortgage, with a repay-by date.
- Bridging loan calculator: when a property sale is the exit.
- Unsecured business loan calculator: for owners who’d rather not use property at all.
Equity on paper, funds in the account
Knowing your headroom is the first step. Turning it into money in the business account means finding a lender who’ll accept your property type, your combined LVR and your reason for borrowing, and whose total cost makes sense for the term. That matching is what we do every day.
The form is brief, around a minute’s work, and putting it in doesn’t run a credit check, so you can ask freely. Nobody circulates your enquiry to lender after lender. Someone experienced in property-secured lending goes through it and rings you to talk through what your property can realistically support. Enter the property value, the amount owing and the sum you need as accurately as you can, and we’ll be able to put the right structure in front of you on the first go.
Frequently asked questions
What combined LVR do second mortgage lenders allow?
It varies by lender, property type and location. Well-located residential property generally supports a higher combined limit than commercial, rural or specialised property. That's why the calculator lets you test anywhere from 50% to 85% rather than assuming one figure.
Does my first mortgage lender have to agree to a second mortgage?
The rules differ between states and between loan contracts. In some states a second mortgage can be registered without the first lender's consent, while others require it or let the first lender treat it as a default under its contract. Your solicitor or the second lender will check this early.
Is a second mortgage cheaper than a caveat loan?
Often, especially over longer terms. A second mortgage is registered on title, which gives the lender stronger security than a caveat. Caveat loans tend to suit very short, urgent needs. Compare total costs in dollars for your actual term.
Can I use a second mortgage for business purposes if the property is my home?
Yes. Many business owners borrow against their home for business purposes. The loan is assessed as business finance, so lenders focus on the equity, the purpose and how you plan to repay.
What happens if my amount is above the limit?
The calculator tells you and shows negative headroom. You could ask for less, offer a second property, or refinance the first mortgage and the new money into one larger first mortgage, which some owners find cheaper overall.