Monday Market Moves | Week of 04 August 2025
Many multifamily owners locked in 3–4% first mortgages during the last cycle — and understandably don’t want to refinance into today’s 6%+ market. But what if you could access equity without disturbing your existing loan? Enter the supplemental loan.
At Essex Capital Markets, we’re seeing a resurgence in supplemental loan programs designed specifically for this situation. These aren’t full refinances. Think of them as a second mortgage behind your existing first — allowing you to tap into trapped equity for capex, acquisitions, or working capital needs.
While these loans behave a bit like mezzanine or preferred equity in that they layer behind senior debt, they’re true mortgage instruments, often easier to execute than equity alternatives.
The Blended Rate Advantage:
When stacking a second loan on top of your existing first, it’s important to understand your blended interest rate — a weighted average of both rates based on loan size.
Blended Rate Formula:
(First loan amount × Rate + Second loan amount × Rate) ÷ Total loan amount
Example:
– $5M first mortgage at 3.75%
– $1.5M supplemental loan at 9.00%
– Blended rate ≈ 4.87%
Compare that to refinancing the full stack at today’s rates — often 6.00%+ — and you can see the appeal.
We’re working with select lenders offering these creative solutions right now — but they require experience to structure correctly and meet underwriting standards.
If you’re sitting on a great first mortgage but need liquidity, this could be your moment.
To speak with our Capital Markets team about loan options in today’s market, please fill out the form below.