First and second mortgage business finance
Blossum provides short-term business finance secured by registered first or second mortgages over New Zealand residential and commercial property.
LVR limits and facility sizes
| Product | Residential security | Commercial security | Facility size |
|---|---|---|---|
| First mortgage | Up to 70% LVR | Up to 65% LVR | Up to $2.5 million |
| Second mortgage | Up to 75% combined LVR | Up to 70% combined LVR | Up to $3 million |
Each facility is assessed against the borrower, accepted property value, total secured debt, loan purpose and proposed exit strategy. LVR is calculated against the property value accepted by Blossum following its credit and valuation assessment. Commercial property may be assessed net of GST where applicable.
First and second mortgage finance
First-mortgage finance
Blossum holds the first-ranking registered mortgage over the property. First-mortgage facilities may be suitable for acquisitions, refinancing, bridging or business funding where the existing mortgage will be repaid at settlement.
Second-mortgage finance
Blossum holds a registered mortgage behind the existing first mortgagee. This allows the borrower to retain an appropriate first-mortgage facility while accessing additional capital against the available property equity.
Second mortgages are assessed by considering the complete secured debt position, not simply the amount being advanced by Blossum.
Property-secured finance for defined business opportunities
The five Cs of credit
Every transaction is assessed against five key areas.
A clearly drawn box
Borrower and broker FAQ
What is the difference between a first and second mortgage?
A first mortgage has the first-ranking registered security interest over the property. A second mortgage is registered behind an existing first mortgagee.
If security enforcement were required, the first mortgagee would generally be repaid before the second mortgagee. For that reason, Blossum assesses the complete secured debt position, combined LVR, property value, borrower equity and exit strategy before approving a second mortgage.
Is a second mortgage unsecured lending?
No. A second mortgage is registered against the property but ranks behind the existing first mortgage. It provides property security while carrying a different priority position from a first mortgage.
How does Blossum manage second-mortgage lending risk?
Blossum assesses the entire secured debt position, not only the amount of the second mortgage. Each application is subject to combined LVR limits, Blossum's own valuation assessment and a review of the existing first mortgage, borrower equity, loan purpose, interest coverage and exit strategy.
Where Blossum considers it the stronger credit outcome, and subject to approval, it may refinance and repay the existing first mortgagee and take a first-ranking registered mortgage over the full lending facility. This consolidates the secured debt under Blossum's control and provides greater control over the security and any enforcement process.
Blossum does not provide development second mortgages or second-mortgage lending secured by bare land or leasehold property.
How much can I borrow under a first mortgage?
Blossum's first-mortgage facilities are capped at $2.5 million, subject to a maximum LVR of 70% on residential property and 65% on commercial property.
How much can I borrow under a second mortgage?
For residential property, Blossum may lend up to 75% combined LVR. For commercial property, Blossum may lend up to 70% combined LVR.
Combined LVR includes the existing first mortgage, the proposed Blossum facility and any other secured debt affecting the property.
Can I keep my current first mortgage?
Potentially, yes. A properly structured second mortgage allows the existing first mortgage to remain in place. This is subject to the first mortgagee's terms and any required consent or priority arrangements.
Can residential property secure a business loan?
Yes. A genuine business-purpose loan may be secured by acceptable residential property, subject to credit and legal assessment. Blossum does not provide consumer or personal lending.
What does the loan cost?
Pricing is assessed transaction by transaction based on the mortgage position, LVR, property, facility amount, term, complexity and overall risk profile.
Submit a deal
Send our credit team the deal and the security details, or ask your adviser to submit it. Receive an indicative answer in around 48 hours, with settlement generally available within 15 days once all conditions and documentation are complete.
Indicative facility sizes and LVR limits are maximum parameters and do not constitute an approval or offer of finance. Actual approved amounts and LVRs may be lower. All lending is subject to Blossum's credit criteria, valuation assessment, due diligence, legal documentation, security requirements, available funding and final approval.
