Quick answer
Many first mortgage contracts require the borrower to get the first lender's consent, or at least give notice, before granting a second mortgage over the same property. Consent can take days or weeks depending on the lender. Where it will be slow, a caveat can protect the second lender in the meantime, and the caveat can later be converted to a registered second mortgage once consent arrives.
Key points
- Check your first mortgage contract for consent or notice requirements
- Consent times vary widely between lenders
- Some second lenders ask for a deed of priority
- A caveat can bridge the wait for consent
- Start the consent request on day one
Why consent comes up
When you take out a home or commercial loan, the mortgage contract usually contains promises about how you will deal with the property. One common promise is that you will not grant another mortgage over it without the lender’s consent, or without telling the lender. The first lender wants to know who else has an interest in its security and how much debt sits against the property.
For a business owner arranging a second mortgage, this matters because the second mortgage cannot always be registered until consent is obtained.
Consent or notice?
Contracts differ. Some require written consent before any further mortgage is registered. Others require only notice. Some say nothing specific. Your solicitor or specialist can review the first mortgage terms and tell you which applies. If you cannot find your contract, the first lender can usually provide a copy.
What the first lender considers
When asked for consent, a first mortgagee typically looks at:
- the amount and terms of the proposed second mortgage
- the combined debt against the property
- your repayment history on the first loan
- whether the second loan affects its ability to recover in a sale
Some first lenders also want a deed of priority with the second lender, which formally sets out the order of claims and any limits, such as the maximum amount the first mortgage can secure ahead of the second.
How long it takes
Consent times vary widely: some lenders respond within days, others take weeks, particularly if the request goes to a central team. Start the request as soon as you decide to proceed, and ask the first lender what it needs to process it quickly.
Ask whether consent will be needed for your deal before you commit to a timeline.
When consent is slow: the caveat bridge
If the business need cannot wait for consent, a caveat loan can often be put in place without it. The caveat protects the second lender’s interest on title. Once consent arrives, the caveat can be converted to a registered second mortgage. See our guide on converting a caveat to a second mortgage.
When consent is refused
If the first lender refuses, options include proceeding with a caveat where appropriate, refinancing the first mortgage into a single first mortgage with a lender that provides the extra funds, or using a different property as security.
Illustrative example
Illustrative only. A business owner wants a second mortgage behind her home loan to fund stock for a large order due in three weeks. Her bank’s consent process typically takes four weeks. A caveat loan funds the order within days. When the bank’s consent arrives, the caveat is converted to a registered second mortgage for the remainder of the term.
Tips for a smooth consent request
- confirm the requirement early by reviewing the contract
- provide the second loan’s terms in writing
- keep the first loan’s repayments up to date
- ask what the first lender needs and send it promptly
- allow time for any deed of priority to be negotiated
What to send with a consent request
A well-prepared request is processed faster. Include a letter from the borrower requesting consent, the proposed second lender’s name and the loan amount, term and purpose, a summary of the interest arrangement, and confirmation that the first loan’s repayments are up to date. If the first lender has a standard consent form, use it. Ask whether it charges a fee for considering consent and how long its team usually takes. Follow up regularly; consent requests can stall in a queue without anyone noticing.
Deeds of priority in practice
Where a deed of priority is required, it typically confirms that the first mortgage ranks ahead of the second up to a stated amount, and that the second mortgage ranks ahead of anything registered later. The deed protects both lenders and gives the borrower certainty about how sale proceeds would be applied. Negotiating a deed can add time, particularly if the first lender wants a priority amount well above the current balance. Your specialist and solicitor can manage this process.
Redraw facilities and offset accounts
If your first mortgage has a redraw facility or line of credit, the second lender will usually treat the full limit as ranking ahead of it, because you could draw on it at any time. In some cases the second lender may ask for the redraw to be capped or frozen while the second mortgage is in place. Discuss this early, because it can affect both the consent request and the amount the second lender can offer.
Keep records
File the consent letter and any deed with your loan documents for future refinances.
Know before you need it
Consent is often the factor that decides between a caveat and a registered second mortgage. Tell us about your first mortgage, its lender and the timeline for your business need, and a specialist will tell you the fastest compliant path. There is no credit check when you first enquire, your details stay with our team, and a copy of your first mortgage terms helps us answer accurately. Start your enquiry.
Frequently asked questions
Can my bank refuse consent?
It can, depending on the contract. If consent is refused, a caveat or a full first mortgage refinance may be alternatives.
What does a bank look at when asked for consent?
Usually the second loan's amount and terms, the combined debt against the property and the borrower's conduct on the first loan.
What is a deed of priority?
An agreement between the two lenders setting out the order and limits of their claims on the property.
Does a caveat need consent?
Caveats can often be lodged without the first mortgagee's consent, which is why they are used when consent is slow.
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