Quick answer
A first mortgage business loan is the primary registered mortgage over a property, used to fund a business need. Private and alternative lenders offer first mortgages starting at $20,000 and reaching $5,000,000 to businesses banks decline, including those with tax debt or credit issues. Because the lender ranks first on the title, larger amounts and longer terms are usually possible.
Key points
- The lender holds the primary registered mortgage
- Suits debt-free property or replacing an existing loan
- Supports the largest amounts, up to $5,000,000
- No valuation needed before approval; interest can be added to the loan
The strongest position on the title
When a lender holds the first mortgage, it is repaid first if the property is sold. That priority is why first mortgages support the largest amounts and the widest range of situations. For an alternative lender, it means a business with a difficult credit history or a pressing tax debt can still borrow substantial sums, provided the property and the plan to repay make sense.
Common uses
| Situation | How a first mortgage helps |
|---|---|
| Property owned outright | Unlocks equity for the business without a bank assessment |
| Bank loan expired or in arrears | Replaces the existing lender and resets the clock |
| Large ATO debt | Clears it in one payment, removing director penalty risk |
| Buying a business or premises | Funds the purchase when bank approval is slow or refused |
| Consolidating expensive debt | Replaces several short-term facilities with one loan |
What the lender assesses
- The property: type, location, condition and recent comparable sales.
- The loan-to-value ratio: how much of the value is borrowed.
- The purpose: what the funds will do.
- The exit: trading income, a refinance or a sale.
No valuation is needed before approval. The property is assessed from sales evidence, title searches and photos, which saves time and cost.
Living with the loan
Prepaid or capitalised interest is available, so the business does not have to make monthly repayments while it gets back on track. The terms are flexible; if a planned bank refinance takes longer than expected, the loan can stay in place as long as you need it. When the refinance arrives, it repays the loan in full.
First, second or caveat?
If the property already has a loan you want to keep, a second mortgage is usually better. If you need money urgently for a short period, a caveat loan may be faster. If you are replacing your current lender, see business loan refinance.
An illustrative example
A pair of business partners own a small warehouse outright. Their logistics business has grown quickly, but a tax debt built up along the way and the bank has declined to lend while it remains. A private first mortgage over the warehouse clears the debt, funds two new trucks and leaves a buffer for wages.
Interest is prepaid at settlement for the first part of the term, so the business has nothing to pay while it uses the funds. With the tax debt gone and the new trucks earning, the partners refinance to a bank loan the following year, and that refinance repays the first mortgage.
Preparing for a fast settlement
Have the certificate of title details, the latest rates notice, identification for every owner, and a short summary of the purpose and the plan to repay. If an existing lender is being repaid, request a written payout figure early. A responsive solicitor is one of the best ways to keep settlement on schedule.
Start with the property
Fill in the short form with the address, rough value, any existing loan and what the money is for. There is no credit check at enquiry, a real lender reads it, and your details stay private. Ask about a first mortgage.
Frequently asked questions
When would I use a first mortgage instead of a second?
When the property has no existing loan, or when replacing the current lender makes more sense than adding behind it, for example if the existing loan is in arrears or has an expiry date.
Can I refinance a bank loan into a private first mortgage?
Yes. This is common when a bank wants to be repaid, a loan has expired or arrears have built up. When the new loan settles, it repays the existing loan.
What property types are accepted?
Residential homes and units, commercial offices and shops, industrial property and, in many cases, vacant land. Location and type affect how much can be lent.
How long can a private first mortgage run?
Terms are flexible. Many are set for a period matched to a planned refinance or sale and can be kept as long as you need.
Prefer to start now? Enquire here
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