Deed of priority

When two lenders hold security over one property, someone has to be paid first if it’s sold. The titles register answers that by default: mortgages rank in the order they were lodged or registered. A deed of priority is how lenders agree something more precise than that default, usually by fixing a dollar ceiling on the first lender’s head start.

What does a deed of priority actually say?

Most deeds of priority cover the same handful of points:

• The order of ranking. Which lender is first, which is second, and that the order holds no matter when each advance was made.
• The priority amount. A cap on how much of the first lender’s debt ranks ahead of the second. Anything the first lender is owed above that cap ranks behind the second lender.
• What counts toward the cap. Principal, interest, enforcement costs, or all three.
• Notice obligations. Each lender agrees to tell the other about a default or an intention to sell.
• Who signs. The lenders always; the borrower and any guarantor often join so they’re bound by the arrangement.

How does it differ from consent and from a registered priority change?

These three ideas get blurred together, but they do different jobs.

Document	What it does	Where it lives
First mortgagee consent	Lets you grant a second mortgage without breaching the first loan contract	A letter or form from the first lender
Deed of priority	Sets the ranking and money cap between the lenders	A private contract between the lenders
Registered priority form	Changes the order of mortgages on the register itself	Lodged with the land titles office

The registry side is worth understanding. Landgate’s guidance on the Western Australian register says instruments over the same interest take priority according to the time of registration. Titles Queensland’s practice manual says priority follows lodgement, and that registering a Form 30 Mortgage Priority, signed by every affected mortgagee, changes the order. In New South Wales the equivalent is a postponement of mortgage (Form 05PM) under the Real Property Act 1900. A deed of priority can sit alongside any of these, or on its own where the registered order already suits everyone.

For the consent piece, read our guide to first mortgagee consent. For how ranking plays out on a sale, see how second mortgages rank.

Why does a deed of priority matter to a borrower?

Because it can decide whether a second mortgage is possible at all, and how much it can be.

A second lender lends against the gap between what the property is worth and what’s owing in first place. If that first debt can grow, the gap can shrink after settlement. Redraw facilities, lines of credit and loans with interest added to the balance all carry that risk. A cap removes it: the second lender knows the most it will ever sit behind, and can lend with confidence.

For a borrower, that usually means:

• a second mortgage that might otherwise be declined becomes workable
• the amount offered can reflect the real equity, not a worst case
• a bank line of credit can stay in place rather than being cancelled

The trade-off is time and paperwork. The first lender has to agree, and its solicitors set the pace. Ask for it at the same time you ask for consent.

Illustrative example

Illustrative example: a Newcastle engineering business owns its workshop, which is worth around $1.6m. The bank holds a first mortgage securing a $600k line of credit, currently drawn to $350k. The owner wants a $300k second mortgage to fund a new contract. Without a cap, the second lender has to assume the bank could be owed the full $600k plus costs. With a deed of priority capping the bank’s first-ranking claim at $650k, the second lender knows exactly where it stands and can assess the $300k against equity it can rely on.

Which related terms should I know?

• First mortgagee: the lender holding the top-ranked registered mortgage.
• Registered mortgage: a mortgage recorded on the title, ranking by lodgement.
• Loan-to-value ratio: how lenders measure the equity a cap protects.
• Capitalised interest: one reason a first-ranking debt can grow.

The full list is in the secured lending glossary. If the bank won’t sign a deed or give consent, refinancing everything into one private first mortgage is often the cleaner route; our page on second mortgage vs refinance compares the two. When you’re ready to test the numbers, you can start a 60-second enquiry.

Could a second mortgage work behind your current lender?

The fastest way to find out is to tell us what the property is, who holds the first mortgage, what kind of facility it is and roughly what’s owing. Enquiring involves no credit check, and your details go to one direct lender, not a queue of strangers. A real specialist reads every enquiry, and accurate figures on the property and its debts let them say early whether a deed of priority, a plain second mortgage or a full refinance fits best. Check whether your property qualifies.