If you need to access equity but don't want to disturb your existing loan, a second mortgage or an equity release structure through your current lender are both worth understanding.
What a second mortgage actually is
A second mortgage is a separate loan secured against your property, sitting behind your existing (first) mortgage. If the property were ever sold in default, the first mortgage is repaid before the second — which generally makes second mortgages a higher-risk, and often costlier, form of lending.
Accessing equity through your existing lender is usually simpler
For most homeowners, a simpler approach is a top-up or equity release through their existing lender, effectively increasing the same loan rather than taking out a separate, subordinate one — worth exploring before considering a second mortgage.
When a second mortgage might still come up
Second mortgages tend to appear in specific situations — for example, where the first lender won't approve a top-up, or where short-term, specialist finance is needed. It's a smaller, more specialised part of the market than standard refinancing.
Chris Brown
Managing Director & Finance Broker at New Vision Financial Services, a credit representative under Australian Credit Licence 384704 and a member of the FBAA and AFCA. More about Chris →
Frequently asked
Is a second mortgage the same as refinancing?
No — refinancing typically replaces your existing loan, while a second mortgage sits alongside it as a separate, subordinate loan. They serve different purposes and carry different risk profiles.
Why would someone choose a second mortgage over refinancing?
Usually because refinancing isn't available or suitable in their situation — for example, exit costs on the first loan, or the first lender being unable to approve additional lending.
Are second mortgages more expensive?
Generally yes, reflecting the higher risk position for the lender — this is very lender and situation-specific, so it's worth a direct conversation rather than assuming a figure.