What Is a Second Mortgage and How Does It Work?

Assurity Capital
Aug 2
2 min read

When people hear “second mortgage,” they often assume it’s complicated or risky—but for business owners, investors, and borrowers with equity, it can be a strategic financial tool. At Assurity Capital, second mortgages are a common solution for fast, short-term funding.

Here’s what you need to know about how second mortgages work and when they’re used.

What Is a Second Mortgage?

A second mortgage is a loan secured against a property that already has an existing (first) mortgage on it. It uses the same property as security, but it ranks second in priority for repayment in the event of a default.

How Does a Second Mortgage Work?

In simple terms:

The first mortgage gets paid out first if the property is sold.
The second mortgage gets repaid only after the first mortgage is fully settled.

Because of this subordinate position, second mortgages are often:

Higher in interest rate (reflecting the lender’s higher risk)
Shorter in loan term
Used for specific business or investment purposes, rather than long-term home ownership

When Do Borrowers Use Second Mortgages?

Second mortgages are popular when a borrower:

Needs fast funding but doesn’t want to refinance their first mortgage
Has equity in their property but limited cash flow or complex income
Wants to avoid break costs or refinancing delays on their current mortgage

Common Scenarios Where Second Mortgages Help

Business owners needing a cash injection secured against their home or commercial property
Property developers bridging a funding gap while awaiting a DA or subdivision
Investors accessing equity without refinancing their existing loan
Borrowers refinancing expensive caveat or short-term private loans

How Second Mortgages Are Structured at Assurity Capital

At Assurity Capital, our second mortgages are:

Available from $50,000+
Secured against residential, commercial, or mixed-use properties
Offered to companies, trusts, and self-employed borrowers
Fast to approve – typically within 24–48 hours
Flexible – with interest capitalised if required

We focus on the property security and exit strategy, not your tax returns or credit history.

Is a Second Mortgage Right for You?

If you have equity in your property and a business or investment purpose, a second mortgage could be a smart way to access funds without disturbing your existing loan. It’s essential to work with a lender who understands your objectives and structures the loan to fit your timeframe.