First mortgages in Australia: the business owner's complete guide

A first mortgage is simply the loan that sits at the top of a property’s title. If the property is ever sold, that lender is paid before anyone else. For an Australian business owner, a private first mortgage is a way to turn property equity into business funds without waiting on a bank’s timetable: either you borrow against a property you own outright, or the new loan pays out your current lender and steps into its place.

We lend from $20k to $5m on first mortgages, for business purposes only, over residential, commercial, industrial, rural property and vacant land. This page is the map. It explains how first position works, how you get into it, what you can borrow, and which of our first-mortgage pages answers your exact situation.

What actually makes a mortgage “first”?

In every state and territory, land is recorded on a central title register, and mortgages are registered against that title. Western Australia’s land registry describes a registered mortgage as operating “as a charge against the land and not as a transfer”, which is a neat way of putting it: you still own the property, and the lender holds a registered claim over it until the loan is repaid.

The register itself is now the record that counts. In New South Wales, paper certificates of title stopped having legal effect on 11 October 2021, and the Registrar General describes the Torrens register as the “single source of truth” for ownership and interests in land. Other states have moved the same way, with mortgages and discharges lodged electronically.

Where more than one lender is recorded, the first-ranking lender is paid out first. A second mortgage or a caveat sits behind it. Our page on how second mortgages rank walks through the order in detail, and our guide comparing a first mortgage, second mortgage and caveat shows when each one fits.

What are the three ways into first position?

Every private first mortgage starts from one of three places. Knowing which one is yours tells you what the settlement will involve and where the time goes.

Starting point	What happens at settlement	Main thing to have ready	Read more
You own the property outright	The new mortgage is registered on a clear title	ID, rates notice, entity documents	Debt-free property loans
A bank holds the first mortgage	The bank is paid out, its mortgage discharged, ours registered	A current payout figure and discharge request	Refinance a bank first mortgage
Another private lender holds it	The private loan is cleared and replaced	A written payout statement	Refinance a private first mortgage

A debt-free property is the quickest of the three, because there’s no existing lender involved. When a bank is involved, the speed of its discharge team often sets the pace, so the request goes in on day one.

Which property can secure a private first mortgage?

Most property types can be considered. What changes from one to the next is how much can be lent against it and what the lender wants to understand before saying yes.

Property type	How it is usually viewed	Our dedicated page
House, unit or townhouse	Deepest buyer market, so the strongest security	Residential first mortgages
Shop, office or medical suite	Judged on location, lease and how specialised it is	Commercial first mortgages
Warehouse or factory	Strong in good industrial precincts	Industrial property loans
Empty commercial building	Fine where the exit doesn’t rely on rent	Vacant commercial property
Vacant land	Case by case; zoning, access and exit matter most	First mortgage on vacant land
Acreage, lifestyle block or farm	Lower lending on large acreage	First mortgage on rural property

Property owned by a company or a family trust works too, provided the right people sign. Our page on company or trust-owned property sets out what’s needed.

How much can a first mortgage raise?

The ceiling is set by the property’s value and its type: up to 80% of value on residential security and up to 70% on commercial, with lower lending on large acreage. There is no sworn valuation. We assess value ourselves, so there’s nothing for you to book or pay for.

Moneysmart defines the loan to value ratio as the loan expressed as a percentage of the asset’s value. On a refinance, the new loan has to cover the payout of the existing debt first, and only what remains under the ceiling is new money for the business.

Illustrative example: a Newcastle engineering firm’s directors own their factory unit, assessed at around $1.4m, with $380k still owing to a bank that has declined to extend. They need $450k to pay an overdue tax debt and fund materials for a large contract. Illustrative: at a 70% commercial ceiling the total lending could reach $980k. A new first mortgage of $860k pays out the bank’s $380k, provides the $450k and covers costs, with interest capitalised for the first 6 months so the contract cash goes into the job. The exit is a bank refinance once the year’s accounts are lodged. Figures are illustrative only.

Run your own numbers with the equity calculator, or check your loan in about a minute.

How is a private first mortgage repaid?

Not the way a 30-year bank loan is. A private first mortgage is a short-to-medium bridge with a defined way out, and our terms are open: no minimum, no maximum, and you can repay early at any time with no penalty.

Interest is capitalised for up to 6 months, so there are no repayments in that period. That keeps business cash on the problem you borrowed to solve. The loan is cleared by the exit, which is usually one of:

• the sale of the property or another asset;
• a refinance to a bank once the issue that worried it is fixed;
• a large receivable, contract payment or settlement;
• a business sale or capital raise.

The exit matters more than almost anything else in the assessment. Our exit strategy guide shows what a believable one looks like.

Which first mortgage page fits your situation?

We’ve written a dedicated page for each common first-mortgage need. Start with the one closest to yours:

• Credit file damaged, ATO debt or past defaults: first mortgage with bad credit.
• A deadline this week: urgent first mortgage.
• Paperwork not up to date: low-doc first mortgage.
• A known end date, such as a sale or tax refund: short-term first mortgage.
• The full product overview: private first mortgage business loans.
• Your private loan is maturing or wrongly structured: refinance a private first mortgage.

Should you choose a private first mortgage or a bank?

The government’s small business guidance puts it simply: a secured loan is backed by collateral, while an unsecured lender looks mainly at the business’s financial health. Banks lend secured too, but they also want full financials, a long serviceability history and time. A private first mortgage leans on the property and the exit, settles faster, and is priced higher for that flexibility.

That’s why most of our borrowers treat a private first mortgage as a bridge, not a destination. They use it to clear the tax debt, settle the purchase or finish the project, then move to a bank. Our guide on private lender vs bank sets out both sides fairly. If you’d rather keep a good bank loan untouched, a second mortgage may suit better; second mortgages in Australia covers that route.

Own property with equity? See if a first mortgage fits

If your property is worth more than what’s owing on it, there’s a fair chance a first mortgage can turn that equity into working money for the business. The quickest way to know is to tell us about it.

The loan check takes about 60 seconds, and asking won’t touch your credit file. Your enquiry comes straight to one direct lender rather than being passed around a crowd of funders, so your phone won’t light up with strangers. A first-mortgage specialist reads it and calls you to talk through the property, what’s owing and how you plan to repay. Give us accurate figures and we can give you a straight answer the first time.

Check what your property can unlock →