Quick answer
Yes, you can take a second mortgage over commercial or industrial property such as a shop, office, warehouse or factory. The existing lender stays in first place and a private lender ranks behind it, lending against the remaining equity. Leases, tenants, property type and the exit plan all shape the amount, which can range from $20k to $5m.
Key points
- Shops, offices, warehouses and factories can all secure a second mortgage
- Leases on the title and the quality of tenants shape the assessment
- A mortgage over land is separate from PPSR security over equipment
- No formal valuation required, even for specialised commercial buildings
- Amounts
- $20k – $5m
- Security
- Commercial or industrial property
- Term
- Typically shorter-term
- Valuation
- No formal valuation required
Commercial and industrial property owners often have the most equity and the least spare cash. The building has grown in value over the years, the bank loan has been paid down, and the business itself is busy absorbing every dollar it earns. A second mortgage puts some of that dormant equity to work without disturbing the facility you already have with your bank.
Can you get a second mortgage on commercial property?
Yes. A private second mortgage can be secured over commercial or industrial property in much the same way as over a house. Your bank keeps first place, a private lender registers a mortgage behind it, and the second loan is based on the equity left after the bank’s debt.
Property types we see most often:
- shopfronts and retail strips;
- offices, whole buildings and strata suites;
- warehouses, factories and industrial units;
- mixed-use buildings, such as a shop with residential space above;
- workshops and showrooms.
Because registered mortgages rank in the order they are lodged, the existing bank loan stays ahead. Our pillar on second mortgage business loans explains the ranking basics and the process from enquiry to settlement.
How is commercial property assessed for a second mortgage?
Commercial property is assessed on what it is and how it earns, not just its size and location. No formal valuation is required. Our specialists assess the property themselves, which saves you the cost of a formal report, skips the wait for one, and avoids a conservative figure set by someone who doesn’t know the building’s story.
The main things that shape the assessment:
| Factor | Why it matters |
|---|---|
| Property type | Mainstream shops, offices and industrial units have the widest pool of buyers |
| Location | Established commercial precincts and industrial estates are easier to sell into |
| Leases | Length, rent and tenant strength affect both the property’s appeal and the exit |
| Vacancy | An empty building needs a stronger, clearer exit |
| Owner-occupied or leased | If you occupy it, the business’s position matters more |
| Existing debt | How much the bank is owed sets the room left for a second |
Specialised buildings, like a purpose-built facility with limited alternative uses, are considered case by case.
Do leases on the title make a difference?
They can make a real difference. A title search shows registered interests on the property, including mortgages, easements, covenants, caveats and leases. When a lease is registered, any lender can see it, and it becomes part of the picture.
What helps:
- Long leases with time left to run.
- Established tenants with a steady trading history.
- Market-level rent, not an inflated figure that a new tenant wouldn’t pay.
What needs explaining:
- leases expiring soon with no renewal agreed;
- related-party leases, such as your own company leasing from your family trust;
- vacancy or a tenant in arrears.
None of these rule a deal out on their own. They simply change what a sensible term and exit look like. For a deeper comparison, see residential vs commercial security.
Is a mortgage over land the same as security over business assets?
No, and the difference is worth understanding if your business already has equipment finance.
A mortgage is registered on the land title through the state land registry. Equipment, vehicles, stock and other business assets are personal property. Security over them is recorded on the Personal Property Securities Register, which is the national register for personal property and expressly doesn’t cover land or fixtures.
In practice:
- Your forklift or truck finance sits on the PPSR and doesn’t compete with a mortgage over your warehouse.
- A commercial second mortgage is secured on the land and building, not the plant inside it.
- Both can exist side by side, each secured on different assets.
What do commercial owners use second mortgages for?
The uses mirror the realities of running a property-heavy business:
- funding a fit-out, expansion or move to a second site;
- paying an ATO debt or overdue BAS before it escalates;
- buying a neighbouring unit or the business next door;
- covering a gap while a large debtor pays;
- bridging until a property sale or a bank refinance completes.
Commercial owners also tend to have more than one asset to work with. If one building is heavily geared and another has room, the second mortgage can sit over whichever property offers the cleaner equity position, and sometimes two titles together make the stronger case.
Illustrative example: a Geelong retailer owns its shopfront and the flat above through a family trust. The building is assessed at about $1.6m and the bank is owed $600k. Illustrative: if total lending on this property type were set at 65% LVR, total debt could reach about $1.04m, leaving room for a second mortgage of up to around $440k. The retailer borrows $300k for a second store, with interest capitalised, and repays it when the bank refinances the combined debt twelve months later.
You can model your own building’s figures in the secured borrowing power calculator.
What if the property is owned by a company or trust?
Commercial property is very often held in a company, a family trust or a unit trust. That isn’t a barrier. It just means the mortgage is given by the entity that owns the property, signed in the correct capacity, and the documents need to reflect the structure accurately. We explain this in detail on the page about company or trust-owned property.
When the commercial loan is large compared with the existing bank debt, replacing everything with a single facility may make more sense. Our page on commercial property first mortgages covers that option, and if you’d like both run side by side, you can send the details for a quick assessment.
Own commercial property? See if you qualify
Start with a short enquiry about the building, the bank debt on it, any leases and what the funds are for. A specialist who understands commercial security reviews it personally, and you’ll hear back with a clear view on the amount and structure that would work.
There’s no credit check to enquire, and we don’t shop your details around to a pile of lenders. Our lending partner fundU is the direct lender, so the decision is made by the people funding the loan. Accurate answers about the property, its tenants and what’s owing make the first answer the right one.
Check what your commercial property could unlock in about 60 seconds.
Frequently asked questions
Can I get a second mortgage on my business premises?
Yes. Whether you occupy the building yourself or lease it to tenants, a second mortgage can sit behind the existing bank loan, provided there's enough equity and a clear exit. The bank's permission may be needed, depending on its mortgage terms.
Does a tenant's lease affect a second mortgage?
It can. Registered leases appear on the title search, and the length of the lease, the strength of the tenant and the rent all affect how the property is viewed. A long lease to a solid tenant generally helps, while a vacant or soon-to-expire building needs a stronger exit.
Is a mortgage over my warehouse the same as security over my equipment?
No. A mortgage is registered on the land title. Equipment, vehicles and other business assets are personal property, and security over them is recorded on the Personal Property Securities Register, which doesn't cover land or fixtures.
What if the property is owned by my company or family trust?
That's common for commercial property and can work well. The company or trustee gives the mortgage, and the documents are signed in the right capacity. We look at the ownership structure early so the paperwork is correct first time.
Do you lend on specialised commercial property?
Specialised buildings are considered case by case, because a narrower pool of buyers can affect the exit. Mainstream shops, offices and industrial units are the most straightforward to assess.