Home / Property development finance / Second mortgages
Extra funding
Sometimes your main lender can’t move fast enough, or won’t lend more. A second mortgage can fill the gap for a short time, at a price.
By Yatin Kainth, Financial Adviser FSP1007497. Last reviewed
Short answer
A second mortgage in NZ is a loan secured behind your existing first mortgage, usually from a non-bank or private lender, for 3 to 24 months. It’s used for deposits, development cost overruns, tax debt or settlement gaps. Because the lender ranks second, rates and fees are high, so it suits short-term needs with a clear exit. Your first lender usually has to agree.
Combined LVR
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Blended interest rate
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Second mortgage interest over the term
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Lender view
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Excludes establishment fees, which are often 2 to 5% on second mortgages. Indicative only.
Check every fee, the default rate and what happens if the exit is late. Make sure your first lender consents, because many loan agreements don't allow a second charge without it. Often a better long-term answer is to refinance everything into one loan. See refinancing and debt consolidation.
Usually, yes. Most first mortgages need the lender's consent to a second charge on the property.
Rates are often 10 to 18% plus establishment fees, because the lender ranks behind your bank.
Sometimes. Second mortgage lenders focus more on equity and exit than on credit history.
Usually 3 to 24 months. They're designed as short-term funding.
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