Quick answer
A first mortgage business loan is a loan secured by the primary registered mortgage on a property's title. It suits owners with no existing mortgage, or those replacing an existing lender, and allows the largest amounts and the simplest structure. Private first mortgages are assessed on the property and the exit, run from $20,000 to $5,000,000 and need no valuation before approval.
Key points
- The lender holds the main registered mortgage, so there is nobody ahead of it
- Suits unencumbered property or replacing an existing lender
- Usually supports a larger amount than a second mortgage on the same property
- Residential, commercial, industrial and many land titles accepted
- Interest can be prepaid or capitalised for the term
What is a first mortgage business loan?
When a lender registers a mortgage on a property’s title and no other mortgage ranks ahead of it, that is a first mortgage. If the property is ever sold, the first mortgagee is repaid before anyone else. For a business owner, a first mortgage is the cleanest way to borrow against property: one lender, one registered security, and the largest amount the property can support.
Private first mortgages are built for speed and flexibility. Rather than an income-based assessment and a formal valuation, the lender looks at the property and how the loan will be repaid. That makes them a natural fit when a bank is too slow, has declined the deal on policy grounds, or simply cannot meet a date.
When is a first mortgage the right structure?
- The property has no mortgage. A paid-off home, an inherited investment unit or a commercial building owned outright can secure a first mortgage straight away.
- You are replacing an existing lender. The new first mortgage repays the existing loan at settlement and can release extra equity in the same transaction. See business loan refinance.
- You need a larger amount. With nothing ranking ahead, a first mortgage usually supports more borrowing than a second mortgage on the same property.
- The existing lender will not consent to a second mortgage. Refinancing into a single first mortgage removes that obstacle.
How much can you borrow?
Loans run from $20,000 to $5,000,000. Within that range the amount depends on:
| Factor | Why it matters |
|---|---|
| Property value | Assessed from comparable sales, title searches and photos; no valuation needed before approval |
| Property type | Houses and units in established areas support higher LVRs than vacant land or specialised property |
| Location | Metropolitan and major regional markets sell faster than remote areas |
| Existing debt being repaid | Comes out of the new loan at settlement |
| Interest and fees | Capitalised interest is added to the balance and must fit within the LVR |
| Exit strength | A firm sale contract or refinance approval supports a stronger position |
The LVR calculator gives a quick read on whether the numbers work before you call.
What happens at settlement?
A first mortgage settlement usually runs through PEXA, Australia’s electronic settlement platform. On the day, the new lender’s funds pay out any existing mortgage, the old mortgage is discharged, the new mortgage is registered, and the balance goes to you or wherever the funds are needed: a vendor, the ATO, a supplier. On straightforward deals this can happen in as little as 24 hours from signed documents.
See whether a first mortgage suits your property in a 60-second enquiry.
Interest and repayment
Private first mortgages are usually interest-only. Interest can be prepaid at settlement or added to the loan, which means many borrowers make no monthly repayments during the term. The full balance is repaid at the exit: a property sale, a refinance to a bank or another lender, or a known incoming payment. If the refinance is delayed, the loan is flexible and can stay in place. When the refinance arrives it repays the loan, the mortgage is discharged and the title is clear for the new lender.
First mortgage or second mortgage?
If your existing home loan or commercial loan is well priced and you only need a modest amount for a short time, leaving it alone and adding a second mortgage can be simpler. If the existing loan is expensive, expiring, or its lender will not cooperate, a single first mortgage is often better. Our guide to first versus second mortgage business loans works through the trade-offs with illustrative numbers.
Using a property that is not yours
The security does not have to be owned by the borrowing company. A director’s home, a family trust’s investment property or a related company’s warehouse can secure the loan, provided the owner agrees, signs as a security provider and, where required, receives independent legal advice. This is common and straightforward when everyone understands the arrangement from the start.
What lenders want to see
- identification for borrowers, guarantors and property owners
- the property address and current rates notice
- a payout figure or statement for any loan being refinanced
- a short explanation of the purpose
- evidence of the exit, such as a listing agreement, a refinance pre-approval or a contract showing an incoming payment
An illustrative first mortgage
Illustrative only. A director owns a small strata office outright and her engineering consultancy has won a contract that needs two new hires and equipment before the first progress payment. Her bank wants two years of updated financials and a valuation, which will take weeks. A private first mortgage over the office provides the working capital within days of signed documents, with interest prepaid from the advance so there is nothing to pay monthly. Once the contract’s first payments arrive and the year-end accounts are finalised, she refinances to her bank, which repays the loan, and the private mortgage is discharged. The office was security for a few months; the contract was won and delivered without a cash squeeze.
Common questions about the title
Lenders search the title of every property offered. They are looking for the registered owners, existing mortgages, caveats, easements, covenants and anything that might restrict a sale. If the title shows an old mortgage from a loan that was repaid years ago but never discharged, or a caveat from a past dispute, flag it on the first call. Most of these issues are routine to clear, but they take time, and time is usually the thing a private first mortgage is meant to save.
Ready to find out what your property supports?
A first mortgage is the most straightforward way to put property equity to work for your business. Tell us the property, the approximate value, anything owing on it and how you plan to repay, and a specialist will come back with a realistic amount and structure. Enquiring involves no credit check, nothing is sent to other lenders, and accurate answers mean the first conversation can be a decisive one. Begin your first mortgage enquiry.
Frequently asked questions
What does first mortgage mean?
It means the lender's mortgage is registered first on the title and is repaid first from any sale. Any later mortgages or caveats rank behind it.
Can a first mortgage refinance my existing bank loan?
Yes. The new loan repays the bank at settlement, the bank's mortgage is discharged and the new mortgage takes first position. This can release extra equity at the same time.
Is a first mortgage cheaper than a second mortgage?
Often, because the lender carries less risk when nobody ranks ahead of it. Pricing still depends on the property, LVR, term and exit.
What property types can secure a first mortgage?
Houses, units, townhouses, shops, offices, warehouses, mixed-use buildings and, case by case, vacant land and specialised property.
How long can I keep a private first mortgage?
As long as you need. The loans are flexible, so if a refinance to a bank takes longer than planned the loan can stay in place.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.