August 4, 2025

Supplemental Loans: A Smart Way to Tap Equity Without Touching Your First Mortgage | Monday Market Moves

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.

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Essex Capital Markets, LLC
2718 W. Roscoe St.
Suite 100A
Chicago, IL 60618
Phone: 773.305.4900
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