Private second mortgage vs private first mortgage: which is faster?

The one question

A private first mortgage usually costs less than a private second, so why would a broker choose the second? Paul answers with a question of his own: how soon does the client need the money?

Where the time goes

Over a property that already has a loan on it, a new private first mortgage means the new lender has to pay out the existing one, and the existing lender has to discharge it. That step is in neither the borrower's hands nor the new lender's. Paul has seen some banks take up to 21 days over it.

A second mortgage does not wait for that discharge. It registers behind the existing loan, which stays exactly as it is. A registered second mortgage does generally need the first mortgagee's consent, so that is the step to start early.

In Paul's words

• “If they need the money like yesterday, well, a private first mortgage is just not going to cut it.”
• “With a second mortgage, we just slot in behind that existing first.”
• “Does the client need the money in a hurry? If they do, a second mortgage is the answer.”

The sequence brokers use

Many brokers fund a fast second mortgage first, then arrange a bank or longer-term first-mortgage refinance afterwards. The second mortgage deals with the date; the refinance deals with the long-term structure at whatever pace the bank sets.