First Mortgages

The upside of a first mortgage:

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Let’s look at short-term first mortgages – what they are, the benefits of using them, and common uses for quick access to funds for 2 to 36 months.

What is a short-term first mortgage?
In the case of mortgages, or loans secured against property, ‘first’ refers to priority. That is, the first mortgage lender has the primary claim to be repaid if the property is sold or the loan defaults. Also referred to as the ‘first registered interest,’ the first mortgage holder has priority over any other claims against the property (except for some Government and statutory claims such as land tax).

Historically first mortgages have been provided by big banks for a long term (often 15 years up to 30 years). Though it’s becoming increasingly clear that longer term loans do not always suit everyone’s circumstances – particularly for borrowers who may only need access to funds for a shorter period of time.

The good news is that there are a number of alternative and private lenders in Australia who provide short-term first mortgages, which typically have a duration of 2 to 36 months.

The benefits of using a first mortgage for short-term funds
Short-term first mortgages from private lenders have a number of benefits, including:

  • First mortgages in Australia are normally more competitive than other loans (such as caveats or second mortgages)
  • A short-term first mortgage can be organised and settled very quickly (often within 3 to 5 days)
  • You can borrow to a higher amount (otherwise known as ‘loan to value ratio’ or ‘LVR’) compared to other mortgage loans
  • Private lenders usually require minimal paperwork for first mortgages in Australia, and are supportive of self-employed applicants, or borrowers with ‘less-than-perfect’ credit history
  • Short-time first mortgages are available from an increasing number of lenders and you can often appl online, which is quick and easy

Why you might use a first mortgage for short-term funds
There are a range of scenarios where you might consider a first mortgage to meet short-term finance needs, including:

  • Releasing equity in your home to fund renovations to prepare your property for sale
  • Paying off an urgent, sizable and often unexpected bills
  • Completing a small residential sub-division or development, to cover costs including construction before funds from sales are received

Some borrowers in Australia may also consider a short-term first mortgage on residential property to raise funds needed for a business. Common uses for business funding include providing working capital (otherwise known as cash flow) for a short period of time to cover the purchase of stock, slow customer invoice payments, outstanding tax bills, and so forth.

Key takeaway
If you own property, a short-term first mortgage is increasingly being considered as a way to obtain funds relatively quickly for personal or business use. You can apply online for a short-term first mortgage. This form of funding can be used for a short period of time (2 to 36 months) for a variety of purposes.

Why now might be the right time to get a short-term first mortgage. Read more >