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Second mortgage borrowing capacity

How much second mortgage capacity sits inside a target combined-LVR cap, given property value and existing first mortgage balance. Educational only.

Quick answer
A second mortgage borrowing capacity calculator shows how much additional debt a property can support behind an existing first mortgage inside a target combined LVR. On a $1,000,000 property with a $500,000 existing first mortgage and an 80% combined LVR cap, the maximum second mortgage capacity is $300,000. Enter your property value, first mortgage balance, and target combined LVR below to model the available capacity.
Inputs
Available second mortgage capacity
$400,000
At a 80% combined LVR cap. Standard maximum on prime residential.
Existing first LVR
53.3%
First balance / value
Total loan at cap
$1,200,000
Value x target cap
Combined LVR at full capacity
80.0%
(First + second) / value
Standard combined-LVR cap on prime residential is 80%. Apartments, commercial and land sit lower. First-mortgage-holder consent required on most files. Above the standard envelope, the file goes to credit committee with structuring attached.

How private credit sizes a second mortgage

The combined position is what matters. Lender adds the existing first balance and the proposed second, divides by the property value, and tests it against the policy cap for the security type. Standard prime residential maxes out at 80% combined; apartments and commercial sit lower. Above-envelope files go to committee with structuring.

Why borrowers use a second instead of refinancing

Two patterns. The existing first carries terms worth keeping, a fixed rate locked below variable, an offset facility with a material balance, a long-dated commercial facility on terms the borrower would not get today. Or full refinance would fail current bank serviceability rules even though the equity position is strong. Both point to a second mortgage behind the first. Detail on second mortgage loans.

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