Second mortgages and mezzanine finance.

We arrange and structure second mortgages and mezzanine finance for developers and property owners, placed with the lenders whose priority position and consent requirements actually fit your deal.

Second mortgages & mezzanine

The gap between senior debt and your equity.

Senior debt rarely covers the whole project, and your own equity is not always enough to fill what is left. A second mortgage or a mezzanine tranche sits behind the senior lender and ahead of your equity, and both are structures we arrange and place — never funds we provide ourselves.

The two terms get used loosely. A second mortgage describes a security position: second in line on title, behind the senior lender's registered mortgage. Mezzanine describes where capital sits in the stack, between senior debt and equity, and it is commonly secured by a second mortgage — though not always. Which you need depends on what the senior lender's documents allow, what the incumbent will consent to, and what the numbers actually require.

This page covers when the gap is worth filling this way, what a first mortgagee's consent and a deed of priority actually involve, and how these positions are sized and placed. For the Western Australia-specific execution steps, see second mortgages over WA security.

When it makes sense

Three reasons this structure gets used.

A second mortgage or mezzanine tranche is not a fallback for a weak deal. It is a deliberate structuring choice, and it fits three situations more often than any other.

01

Topping up senior debt

A construction facility is typically capped at the lower of a loan-to-value test and a loan-to-cost test, and whichever binds sets the limit — see how that arithmetic works in the development finance calculator. Where that leaves a shortfall against total cost, a mezzanine tranche can bridge it rather than the sponsor finding more cash. Read how the mechanics work in a worked senior-plus-mezzanine funding stack.
02

Releasing equity from an existing asset

Where equity is trapped behind a first mortgage — in a single property or across a crossed portfolio — a second mortgage can release some of it without disturbing the senior facility. See releasing a cross-collateralised property and, where the asset is completed development stock, equity release from completed stock.
03

Reducing the equity required on a new deal

Lifting combined leverage with a mezzanine tranche reduces the cash a sponsor has to contribute to a project, at the cost of a more expensive, subordinated layer of capital. Read how developers use mezzanine finance to reduce equity requirements before assuming it is the right call for a given deal.
The mechanics

Priority and consent are the transaction.

A second-ranking position is not simply another loan application. It is a request to the incumbent first mortgagee to accept a further encumbrance over security it already holds, and most of what determines whether the deal proceeds happens between the two lenders, not between you and either one individually.

01

First-mortgagee consent

Commercial first-mortgage documents commonly restrict further encumbrances without the senior lender's consent, and registration of a second mortgage generally depends on that cooperation. Consent is a credit decision inside the senior lender, on its own timetable — it belongs in a reasoned submission, not an email chase.
02

Deed of priority

This document fixes the priority amount — the maximum the first mortgagee may recover ahead of the second, including interest and enforcement costs — and typically also covers further advances, notice and standstill. Without an agreed ceiling, a capitalising first mortgage can erode the second position without limit, the usual reason these deals are declined outright. See deed of priority from the mezzanine lender's seat.
03

What the second lender actually assesses

The exit matters more than the asset. Titles, the first mortgage's balance and limit, a valuation position and an evidenced repayment event produce a real answer; a summary without them produces a soft decline. See priority deeds explained for what typically sits inside that document.
Sizing and pricing

How lenders think about a subordinated position.

A second-ranking or mezzanine position carries more risk than a first mortgage, because it only recovers after the senior lender is paid out in full. Market practice generally reflects that in three ways. Exact leverage and pricing move deal by deal and lender by lender — we do not publish figures, and any indicative terms remain subject to the lender's own credit approval, valuation and documentation.

The two instruments are also priced differently. A registered second mortgage gives a proprietary security interest; a caveat-only or contingent-mortgage structure gives less, and is usually only used where a registered second mortgage is not available. See second mortgage or caveat, the second mortgage vs caveat loan explainer, and first mortgage vs second mortgage on the security position itself.

01
The amount advanced is sized more conservatively once the first mortgage's exposure is deducted.
02
Pricing sits above first-mortgage rates to compensate for the subordinated position.
03
Terms are usually shorter-dated, matched to a specific, evidenced exit.
Model your own numbers before approaching a lender. The second mortgage sizing calculator works through what a second-ranking facility can realistically support once the first mortgage's balance and limit are accounted for.
Second mortgage sizing calculator
How it works

The order these deals are best worked.

01

Read the senior documents first

The first mortgage's facility agreement and registered mortgage decide what is possible. Establish the limit rather than the drawn balance, any capitalising interest, and whether a priority amount is already recorded.
02

Test appetite with a complete package

Titles, the first-mortgage position, a valuation view and an evidenced exit go out together, not as a summary email. Second-ranking positions are assessed on the exit more than the asset.
03

Put the consent request to the first mortgagee properly

State what the facility does, why the sponsor's position improves, the priority amount sought, and the exit — the questions any credit team asks before agreeing to a further encumbrance.
04

Negotiate the deed of priority in parallel

Priority amount, further advances, notice, standstill and enforcement mechanics are agreed between two lenders and two sets of lawyers. Left until after credit approval, this step consumes time everyone assumed they had.
05

Sequence execution and lodgement

Who signs, where they are, and whether the dealing can be lodged electronically all affect the settlement timetable — more so across state lines. Our interstate WA-VIC case study shows this pre-solved rather than discovered late.
What it costs

Scoped and confirmed before anything starts.

There are no published fees for arranging a second mortgage or mezzanine facility, because a fee that fits a straightforward single-state consent tells you nothing about one involving an interstate deed of priority and enforcement negotiation. Every engagement is scoped on its own facts, and the fee is confirmed in writing before we start work — alongside any lender-paid fees, disclosed to you in the same way.

Track record

A second mortgage a funder said couldn't be done.

One past transaction, included to show how the assessment and the escalation were handled. Not an offer, benchmark, or indication of what any other transaction may achieve.

Interstate second mortgage

Shepparton, VIC and Canning Vale, WA

A capital-raise secured across two properties in two states, the WA property sitting behind an existing ANZ first mortgage. Most non-bank second-mortgage lenders will not take WA security at all. Running both securities as one coordinated package, and building the WA wet-ink signature requirement into the settlement timetable up front, got the facility placed and settled inside the target window.
Read the case study →

More completed files sit on our track record, and the mechanics behind this one are set out in second mortgages over WA security.

Questions

What borrowers usually ask.

Is a second mortgage the same thing as mezzanine finance?

They overlap without being identical. A second mortgage describes the security position — second-ranking on title behind the senior lender. Mezzanine describes where capital sits in the stack, between senior debt and equity, and it may be secured by a second mortgage, other security, or none at all. Which suits your deal depends on the senior documents, the exit, and the cost and control you will accept.

Will the first mortgagee always consent to a second mortgage?

No. Consent is a genuine credit decision inside the senior lender, not an administrative step, and it can be refused. An initial no is often a response to an incomplete request rather than to the proposition itself, which is why the consent request goes in as a reasoned submission, not a quick email.

What does a deed of priority actually do?

It fixes the priority amount the first mortgagee may recover ahead of the second, covering principal, interest and enforcement costs, and it commonly also governs further advances, notice, standstill and how enforcement proceeds are applied. Both mortgagees sign it, usually with the borrower and guarantors.

How much can a second mortgage or mezzanine tranche add?

There is no general figure, and any answer given before your specific security, first-mortgage position and exit are known should be treated with caution. The second mortgage sizing calculator is a starting frame; final sizing is a lender credit decision.

Can this structure fund an entire project on its own?

No. A second mortgage or mezzanine tranche sits alongside a senior facility and your own equity — it closes a gap in the stack, it does not replace the stack. Where the whole capital structure needs designing, that is development and construction finance work.
Talk it through

Bring us the gap in the stack, not just the site.

Siare arranges and structures second mortgages and mezzanine finance for business and investment-purpose borrowers. We take your position to the lenders whose policy and priority requirements actually fit it, rather than the first one that answers the phone.

Send the senior facility details, the security, and what you are trying to achieve — top up, release, or reduce equity — and we will give you a candid view on whether it is placeable and what stands in the way.

Start a conversationDevelopment & construction finance

General information for business and investment purposes only. This is not consumer credit, and nothing on this page is financial, tax, legal or accounting advice. Nothing here is an offer of finance or an indication that finance is available. All finance is subject to lender assessment, credit criteria, satisfactory valuation, security and documentation. Case studies describe individual past transactions and are not a guarantee, benchmark or prediction of any future outcome. Obtain your own independent legal, tax and accounting advice before entering into any transaction.