A fast first mortgage business loan is the cleanest way to borrow against property when there's either no mortgage on it at all, or the lender that's there needs to go. fundU lends $20,000 to $1m by first mortgage for New Zealand businesses, and because we decide ourselves, we can move at the pace your situation needs.
Two groups of owners come to us for first mortgages. The first own property outright, often a commercial building, a workshop or a paid-off home, and want to put that equity to work for the business. The second have a lender who wants out, whether that's a maturing private loan, a bank facility under review or expensive short-term debt that's getting harder to carry. Either way, the result is one lender in first position and a clear plan.
What is a first mortgage business loan?
A first mortgage business loan is a loan secured by a mortgage registered in first position on the property's record of title. First position means that if the property were ever sold, this loan is repaid before anything else secured on it.
Being first ranking gives the lender the strongest possible security, which in turn makes it easier for us to say yes, lend a meaningful amount and consider situations other lenders won't. For you, it usually means a simpler arrangement: one mortgage, one lender and one set of terms, rather than two lenders sharing the same property.
A fundU first mortgage is always for a business purpose and runs for a short to medium term, with a clear exit such as a sale, a bank refinance, a contract payment or business cash flow.
When is a first mortgage the right choice?
A first mortgage is usually the right structure when the property is freehold, or when the existing lender needs repaying in full. If you want to keep your bank loan, a second mortgage is generally the better fit.
Situations where a first mortgage makes sense:
- Freehold property. You own your home, rental, commercial or industrial property outright and want to release equity for the business.
- A maturing loan. An existing private or short-term loan has reached its end date and needs replacing.
- A lender pulling back. Your bank has reviewed your facility and asked you to refinance elsewhere.
- Expensive debt. You want to replace a costly first mortgage and pay out other creditors in one step.
- Enforcement pressure. Your lender has made a formal demand and you need a refinance quickly.
If you're weighing up both options, our guide on first vs second mortgage business loans walks through the trade-offs.
First mortgage vs second mortgage: what's the difference?
The difference is ranking. A first mortgage sits at the front of the queue, while a second mortgage sits behind an existing first mortgage, usually the bank's.
| First mortgage | Second mortgage | |
|---|---|---|
| Position on title | First ranking | Behind an existing first mortgage |
| Existing bank loan | Repaid, or there isn't one | Stays in place, untouched |
| Number of lenders | One | Two |
| Common uses | Freehold property, refinancing a lender out | Borrowing against equity while keeping the bank loan |
| fundU loan size | $20,000 to $1m | $20,000 to $1m |
Both are fast, both are decided by our own credit team, and both are for business purposes. If keeping your bank in place matters most, read about our fast second mortgages.
Why borrow against freehold property instead of selling it?
Because selling is slow, final and often happens at the wrong moment. A first mortgage lets you keep the asset and still put its value to work.
Plenty of Kiwi business owners have spent decades paying off a building. The workshop in Onehunga, the shop in Tauranga, the farm cottage in the Waikato. That equity is real, but it does nothing for a business that needs cash this month. Listing a commercial property can take months, agents and marketing cost money, and a forced sale rarely achieves the best price.
A first mortgage over freehold property avoids all of that:
- You keep ownership, and any future growth in value
- The business keeps trading from the premises without disruption
- You choose the timing of any eventual sale, if you sell at all
- The loan can be repaid by a later refinance, a contract payment or cash flow
For owners whose premises are commercial or industrial, our page on commercial property loans goes into more detail about using those buildings as security.
Can fundU refinance your existing lender out?
Yes. Refinancing an existing lender out is one of the most common reasons businesses come to us for a first mortgage, and we do it regularly.
The old lender is repaid from our loan at settlement, their mortgage comes off the title and ours goes on in first position. Any surplus can be used for other business needs, such as clearing IRD debt or paying creditors, if the numbers support it. Our business debt consolidation page covers rolling several debts into one, and the guide to refinancing expensive short-term business debt explains what to look for.
Ask your current lender for a payout figure as early as possible. It shows exactly what's needed to clear them, including any break costs or default charges, and it's often the step that sets the pace of a refinance.
How does refinancing out work, step by step?
Here's what usually happens when fundU refinances an existing first mortgage:
- Enquiry and first call. You tell us about the property, the current loan and why it needs replacing.
- Initial assessment. We look at the property, the amount owed, the purpose and your exit. No financial statements or tax returns needed at this stage.
- Payout figure requested. Your lawyer asks the current lender for a written payout figure.
- Valuation and title check. Depending on the property, we'll usually need a current valuation from a registered valuer.
- Approval and documents. Your lawyer explains the loan documents and gets them signed.
- Settlement. Our funds repay the old lender, their mortgage is discharged and ours is registered through LINZ.
How fast can a first mortgage be funded?
Fast. Because the people who assess your loan are the people who fund it, there's no waiting on a committee or a panel. In some cases funding can happen in as little as 24 hours once approved.
The main variables are outside the loan decision itself. How quickly the valuation comes back, whether the title is straightforward and how fast an existing lender provides a payout figure and discharge all play a part. Freehold property with a clean title and a responsive lawyer is typically the quickest. We'll give you a realistic timeline on the first call and keep you updated as things progress.
If your deadline is tight because of a demand or a notice, tell us straight away. Our urgent business loans page explains how we prioritise time-critical situations.
What does a fast first mortgage look like in practice?
Here's a typical refinance where a first mortgage solves the problem cleanly.
Example scenario
A Wellington engineering firm owns its light industrial building, worth about $1.6m. Two years ago it took out a short-term private loan of $520,000 against the building to fund new machinery. That loan is now maturing, and the lender has said it won't extend. The firm also has $70,000 of GST and PAYE arrears.
fundU provides a first mortgage of $600,000 over the building. At settlement the old lender is repaid in full and the IRD arrears are cleared. Capitalised interest means no scheduled monthly repayments during the term, giving the firm breathing room while it completes a large contract. The exit is a refinance to a bank once the contract income shows in the annual accounts.
What made it work was the combination of strong equity in the building, a clear purpose and a believable way out. The firm didn't have to sell its premises or scramble for a new lender at the last minute, and replacing two pressures with one loan meant the directors could focus on delivering the contract rather than juggling the old lender and Inland Revenue at the same time.
What you'll need for a first mortgage business loan
Have these ready for your first conversation:
- The property address and the names of the owners on the title
- A rough idea of the property's value
- Details of any existing lender, the balance owing and the maturity date
- Any letters from your current lender, such as a demand or a refusal to extend
- What the funds will be used for, beyond repaying the existing lender
- Your exit plan and expected timing
- Photo ID for all borrowers, owners and guarantors
- Your lawyer's contact details, so we can move quickly once approved
Ready to talk about a first mortgage?
Whether your property is freehold or your current lender needs to be repaid, fundU can give you a straight answer quickly. It costs nothing to enquire, it takes only a couple of minutes and your credit score isn't affected. Expect a call back from a lending specialist, or ring us on 09 875 4577.
Start your enquiry to see if you qualify for a fast first mortgage.
Frequently asked questions
What is a first mortgage business loan?
A first mortgage business loan is secured by a mortgage registered in first position on the property's title. If the property is sold, the first mortgage is repaid before any other lender. fundU offers first mortgages from $20,000 to $1m for business purposes, on freehold property or where we refinance an existing lender out.
Can fundU refinance my existing lender?
Yes. If your current bank or private lender needs to be repaid, fundU can refinance them out with a first mortgage, provided the property value, purpose and exit plan stack up. Your lawyer requests a payout figure, and on settlement our funds repay the old lender and their mortgage is discharged from the title.
Why would I choose a first mortgage instead of a second mortgage?
A first mortgage suits you if the property is freehold, if your current lender is asking to be repaid, or if you want to replace an expensive existing loan with one simpler facility. If you'd rather keep your bank loan in place untouched, a second mortgage behind the bank is usually the better fit.
How fast can a first mortgage business loan be funded?
fundU makes its own lending decisions, so first mortgages can move quickly. In some cases funding happens in as little as 24 hours once approved. Refinances depend partly on how fast the existing lender provides a payout figure and discharge, so we start that process early and keep you updated.
Can I get a first mortgage on freehold commercial or industrial property?
Yes. fundU lends first mortgages against freehold residential, commercial and industrial property across New Zealand, and considers some land and lifestyle property case by case. Many business owners have paid off a building over the years, and a first mortgage lets them use that equity for the business without selling.
What happens if my current lender has started enforcement?
Talk to us straight away. If your lender is demanding repayment or has started the steps toward a mortgagee sale, a refinance may still be possible if there's enough equity and a realistic exit. Acting early gives your lawyer and ours time to request a payout figure and complete settlement before the situation escalates.
A practical next step
Ready to see what's possible?
Tell us what the business needs, when you need it and what property is available. A fundU lending specialist will call you back to talk it through — enquiring is free and won't affect your credit score.