How priority works
Australian land titles record security interests in order of registration. That order decides who gets paid from sale proceeds. Costs of sale come first, then the first mortgagee's principal, interest and enforcement costs, then the second mortgagee, and so on down the queue.
Being first is not a matter of who lent the most or who lent first in time — it is a matter of what is registered on title, which is why lenders search title and control registration at settlement.
Why first mortgages are the cheapest private debt
The first mortgagee has the largest equity buffer beneath it and controls the enforcement process. That combination is the lowest-risk position in private credit, so it attracts the sharpest pricing, the highest loan amounts and the widest investor appetite.
A lender at 65% of a metropolitan property's value can absorb a meaningful fall in value, selling costs and unpaid interest and still recover in full. That is the whole basis of first-mortgage private lending.
What a lender checks before taking a first mortgage
A current independent valuation. A title search confirming ownership and existing encumbrances. Discharge arrangements for any existing mortgage so the new lender registers first. Confirmation the borrowing entity has the power to borrow and grant security. Rates, land tax and owners corporation levies, since statutory charges can rank ahead. And a documented exit — a sale contract, a refinance approval, or realistic evidence of one.
Key points
- Priority is set by registration order on title.
- First mortgagees are repaid before all other mortgagees.
- First-ranking security attracts the lowest private lending rates.
- Existing mortgages must be discharged for a new first position.
Frequently asked questions
Can there be two first mortgages?
Not over the same title. Two lenders can share a first-ranking position through a priority or intercreditor deed, but only one mortgage registers first.
Does a first mortgage cover unpaid interest?
Yes — a registered mortgage generally secures principal, interest, capitalised interest, fees and enforcement costs as set out in the loan documents.
Can I get a first mortgage on land with no building?
Yes, but LVRs on vacant or rural land are materially lower because the asset is slower and harder to sell.