Second Home Mortgage: Broker Assessment Guide

A second home mortgage finances another residential property while the client already owns a home. Assess the intended use, deposit or equity contribution and ability to repay all retained debt before choosing a lender. The property being purchased can become the client’s main home, remain for private use or earn rent.

Owning a first home doesn’t itself qualify the client for second home loans. Equity can help fund the purchase, but any borrowing against that equity adds another repayment commitment.

Distinguish a Second Home Mortgage

A second home mortgage describes a property purchase, while a second-ranking mortgage describes an additional mortgage over property already mortgaged. The number of properties and the ranking of security are separate facts.

When a client says, “I have a mortgage and want to buy another house”, establish the intended transaction before calculating borrowing power.

Client’s intention	Assessment route	Fact to establish
Buy another property and retain the current home	New purchase with existing commitments	How each property will be used
Replace the current home and sell it	Purchase and sale	Whether finance depends on the sale proceeds
Buy a rental property	Investment purchase	Proposed rent and ongoing property expenses
Replace an existing loan without buying	Refinance	Existing debt and any additional funds requested
Borrow more against the current property	Additional secured borrowing	Purpose of the funds and proposed security

A request for a “second mortgage for a second home” can mean an equity-funded deposit plus a new purchase loan. Ask which property secures each proposed loan. If the request actually concerns another mortgage over the same title, use the second mortgage guide.

When the purchase relies on selling the first home after settlement, assess the overlap through the bridging loan requirements guide. A plan to retain both properties needs ongoing repayment capacity for both.

Classify Occupancy and Property Use

Record who will occupy each property, when they will move and whether anyone will pay rent. Classify the existing home as well as the new purchase, because its use can change after settlement.

Intended use	What to record	Effect on the assessment
New principal home	Move-in date and what happens to the old home	New living arrangements and retained debt must agree with the application
Holiday or occasional-use home	Private-use periods, location and any letting arrangement	Private use produces no rental income during those periods, while property costs continue
Family accommodation	Occupants, relationship to the borrower and any rent agreement	Free accommodation produces no rent to support repayments
Income-producing investment	Tenancy type, expected rent and ownership share	Rental evidence and the lender’s income treatment decide what enters servicing

For mixed private use and short-term letting, record both uses explicitly. A holiday rental estimate doesn’t establish year-round income when the client reserves the property for personal use.

Property use and acceptable security need separate checks. Macquarie’s 10 September 2026 credit guidelines list serviced apartments, timeshare properties and strata-title hotel or motel rooms as unacceptable securities. Its income rules can recognise rent from short-term stays, but that doesn’t make those property types acceptable security.

Describe the actual occupancy arrangement in the file. Where family use or mixed letting needs individual classification, obtain the lender’s written treatment before relying on an owner-occupied or investment route.

Check Deposit, Equity and Existing Debt

Calculate the purchase funding gap after cash contributions, transaction costs and the proposed purchase loan. Then identify how any equity contribution will be borrowed and which property will secure it.

Include transfer duty, conveyancing, registration and lender costs in the funding schedule. Use the applicable state or territory amounts and the selected loan’s actual fees. Keep a separate allowance for the client’s cash reserve after settlement.

For each existing facility, record the lender, balance, limit, repayment, remaining term and security. Include interest-only expiry dates, redraw arrangements and debts that will be repaid at settlement. Money in an offset account and available redraw have different effects on the funding schedule, so identify which funds the client will use.

There are several ways the client can supply the contribution.

• Pay cash and leave the existing property’s loan and security untouched.
• Borrow against the existing property, with a separate loan for the new purchase.
• Use both properties as security for the proposed facilities, with the security arrangement set out in writing.
• Combine cash with an approved equity release.

ANZ’s next-home guidance, as at October 2026, explains that equity access depends on income, living expenses and existing debt. It also warns that borrowing more against the home increases repayments and the risk to that property.

Fictional Funding Example

This example explains the funding arithmetic. It isn’t a borrowing estimate or a lender’s deposit policy.

The client buys a $600,000 property and allows an illustrative $30,000 for transaction costs. A proposed $480,000 purchase loan leaves $150,000 to fund. Their $50,000 cash contribution leaves an equity-release request of $100,000.

The current home is valued at an assumed $800,000, with an existing loan balance of $400,000. An illustrative 80% lending ceiling gives $640,000 of total secured debt and $240,000 of potential equity release before fees and other restrictions. The loan-to-value ratio (LVR) is debt divided by the lender’s accepted property value.

The requested $100,000 sits below that illustrative ceiling, but still needs approval. If it proceeds, the existing property’s debt rises to $500,000 and total property debt becomes $980,000. Servicing must cover that full debt, including the equity release.

A smaller valuation or a lower permitted LVR reduces the equity available. A servicing shortfall can prevent the release even when the equity calculation appears sufficient.

Assess Serviceability and Ongoing Costs

Serviceability tests whether the client’s verified income can support the proposed loans alongside existing commitments and living costs. Use the chosen lender’s assessment inputs for both properties and any equity-release facility.

Reconcile income evidence with actual receipts. Enter all retained loans and credit limits, even when a card or facility has little outstanding debt. Record any continuing rent or board the client will pay after the purchase.

Rental income needs its own assessment. Macquarie’s calculator guidance, as at October 2026, counts 75% of verified residential rent and 65% for short-term stays or room rental. Income is apportioned to the applicant’s ownership share.

Macquarie instructs brokers to enter investment property expenses at 20% of verified rent for new investment properties. For existing properties, actual expenses above 20% must be used. Follow its calculator instructions, so rental shading and expenses aren’t entered twice through an improvised deduction.

Prepare an ongoing budget for each property. Include council and water rates, building or landlord insurance, maintenance and strata charges where applicable. Add management fees and vacancy allowances for a rental property, plus utilities and upkeep for a privately used second home.

Westpac’s guide to retaining the first home as an investment, as at October 2026, identifies rent shortfalls and tenant loss as costs the owner must fund. Test how the client’s budget handles a vacancy or repair bill alongside both loans. Passing a lender’s calculator doesn’t remove those cash-flow risks.

Prepare Property and Income Evidence

Build the evidence pack around the proposed purchase, the source of the contribution and every income or debt figure used in servicing. Make the occupancy statement consistent with the rent and expense assumptions.

Evidence	What it supports	Check before submission
Signed purchase contract and settlement details	Price, property and funding deadline	Purchase loan and contributions cover the settlement amount
Lender-accepted valuation	Security value and property acceptability	Title, property type and use match the application
Savings statements and deposit receipt	Cash contribution	Funds remain available after other commitments
Equity-release approval and existing-property valuation	Borrowed contribution	Amount, timing and security match the funding schedule
Existing loan statements and facility terms	Debt balances, limits and repayments	Retained debt includes the equity release
Payslips or relevant self-employed income documents	Ongoing personal income	Assessment figures reconcile with the evidence
Lease, rental statements or accepted rental estimate	Rent from each relevant property	Applicant’s ownership share and letting arrangement are recorded
Living-expense records and property cost schedule	Costs after settlement	Both homes and any continuing rent or board are included
Occupancy statement and relevant letting agreement	Principal, private, family or rental use	Mixed use is described with dates and private-use periods

Macquarie’s 10 September 2026 guidelines use the lower rental figure from its ordered valuation or acceptable rental evidence for a proposed security purchase. An agent’s estimate must be no more than 60 days old at submission. Where the estimate gives a range, Macquarie uses the lower amount.

For a case requiring individual treatment, send a specific written question with the facts attached. For example, describe rent-free family occupancy or private-use periods within a holiday letting arrangement. Ask the lender to confirm the classification, acceptable security and income evidence for that arrangement, then retain its response.

Compare Verified Lender Conditions

Compare lenders using the same property use, contribution, debts and verified income. A different assumption about rent or security can produce a different outcome even when the requested loan amount stays unchanged.

Westpac’s investor broker page, as at October 2026, states 5% rental-income shading for eligible investment properties. Its investment purchase policy also permits up to 95% LVR for eligible principal-and-interest loans with lenders mortgage insurance (LMI). LMI protects the lender if the borrower defaults and the property sale doesn’t cover the debt.

Those conditions describe eligible investment lending. They don’t classify a private holiday home or establish that a particular mixed-use property qualifies.

Macquarie’s calculator guidance, as at October 2026, applies 75% residential rental income recognition and 65% for short-term stays or room rental. Its 10 September 2026 security rules separately exclude serviced apartments. A client with short-term rental income therefore needs both the income calculation and security decision resolved.

Use a comparison record that states the occupancy classification, acceptable property type, permitted borrowing and accepted rental evidence for each lender. Add assessed repayments for all retained debt and the resulting servicing position. Record any exception separately from standard policy.

Bulma’s Policy Advisor can help you compare lender rules and keep the quoted policy wording with the file. For this assessment, compare the rules for occupancy, rental income and acceptable security using the client’s actual arrangement.

Choose the route whose documented conditions fit the property and whose assessment supports the full funding requirement. Before recommending it, reconcile the contribution and repayments to the evidence pack. A positive servicing result and a policy fit are assessment inputs, while the lender’s credit decision determines approval.