Case Study: How a $1M Second Mortgage Helped a Richmond Businessman Secure His Next Acquisition

In today’s environment, established business owners are increasingly turning to structured second mortgages — not as a last resort, but as a deliberate capital strategy.

A recent transaction in Richmond, Victoria demonstrates why.

The Scenario

An experienced businessman owned a commercial office building in Richmond valued at approximately $7,000,000.

He had:

• Strong equity in the property

• An existing first mortgage

• A time-sensitive acquisition opportunity

What he did not have was time.

The acquisition required $1,000,000 in capital, quickly and without disrupting his existing banking structure.

A full refinance would have taken months.

The deal would not.

The Capital Structure

Renown Lending structured a $1,000,000 second mortgage secured against the Richmond office building.

Transaction Summary

• Security: Commercial office building – Richmond VIC

• Property Value: $7,000,000

• Loan Amount: $1,000,000

• Rate: 1.25% per month

• Term: 6 months

• Purpose: Business acquisition

• Exit Strategy: Refinance arranged by originating broker

The combined loan-to-value ratio remained conservative given the asset strength. The equity buffer was significant. The exit pathway was clear from day one.

This was not distressed lending.

It was structured, strategic capital deployment.

Why We Did Not Refinance the First Mortgage

A common misconception is that refinancing is always the most logical solution when capital is required.

In reality, refinancing can:

• Trigger full financial reassessment

• Reset covenants and loan terms

• Increase documentation requirements

• Disrupt banking relationships

• Take weeks or months to settle
  

For a business acquisition requiring speed and certainty, that pathway was commercially impractical.

A second mortgage allowed the client to:

• Retain his existing first mortgage

• Avoid full financial re-underwriting

• Access equity rapidly

• Match funding precisely to a six-month need
  

This is where structured private credit provides leverage.

The Economics of Speed

The facility was priced at 1.25% per month.

Some focus purely on rate.

Sophisticated business owners focus on outcome.

When capital enables the acquisition of a profitable business, the more relevant question becomes:

What is the return on opportunity versus the cost of delay?

In this case:

• The term was defined (6 months)

• The exit was structured

• The cost was transparent

• The opportunity was immediate

There was no open-ended exposure.

There was controlled leverage aligned to a defined commercial objective.

Why Second Mortgages Are Increasingly Strategic

Across Australia, business owners with strong property equity are utilising second mortgages as flexible capital tools.

Several structural shifts are driving this trend.

1. Banks Are Slower and More Conservative

Traditional lenders operate under tightening regulatory frameworks. Full financials, serviceability buffers and covenant reviews can delay approvals significantly.

Entrepreneurs cannot always afford that delay.

Second mortgages prioritise:

• Asset strength

• Equity position

• Exit strategy

Speed and clarity replace procedural drag.

2. Equity Is Often Dormant

Many business owners hold substantial commercial property assets accumulated over decades.

That equity often sits idle.

A second mortgage unlocks that capital without disturbing the primary facility.

It is a release mechanism — not a restructure.

3. Business Timelines Rarely Align With Banking Timelines

Acquisitions
Stock purchases
Tender bonds
ATO settlements
Partnership buyouts

These events are time-sensitive.

Private second mortgages are designed as bridge capital — not permanent debt.

Used correctly, they create temporary leverage aligned with defined exits.

4. Exit Pathways Are Now Professionally Managed

The stigma around second mortgages historically came from poor structuring.

Today, disciplined brokers and private lenders collaborate from the outset.

In this Richmond transaction:

• The refinance pathway was established from day one

• The term matched the anticipated refinance timeline

• The exit was realistic and documented

The facility had a beginning, a purpose, and an end.

That discipline matters.

The Role of Structured Underwriting

At Renown Lending, every second mortgage must demonstrate:

• A strong underlying asset

• A clear equity buffer

• A genuine commercial purpose

• A defined exit strategy

• A sensible combined LVR
  

This Richmond facility satisfied every criterion.

Strong asset.
Experienced borrower.
Clear commercial objective.
Defined six-month term.
Broker-managed refinance exit.

This is not reckless leverage.

It is structured private credit.

The Outcome

• The client secured the acquisition

• Capital was deployed quickly

• The refinance pathway was established

• Six months of strategic funding unlocked long-term growth
  

That is the function of disciplined bridge capital.

Second mortgages are not for everyone.

They are not long-term residential solutions.
They are not substitutes for weak planning.

But for established business owners holding significant equity and facing time-sensitive opportunities, they are one of the most powerful tools available.

This $1,000,000 second mortgage against a $7,000,000 Richmond commercial property demonstrates what is possible when:

Equity, timing and professional structuring align.

In business, hesitation can be expensive.

Structured capital — deployed properly — creates leverage, growth and momentum.

If you are a broker or business owner holding substantial equity and facing a short-term opportunity, a second mortgage may not simply be an option.

It may be your strategic advantage.