Increase the loan with the existing bank
The existing lender increases its first-ranking loan. This can be straightforward if the bank agrees and the terms remain competitive.
Service · Additional borrowing
Additional Property Borrowing: Releasing Liquidity
Principal repayments and increased property values can create unused borrowing capacity. Additional borrowing can turn that capacity into liquidity for acquisitions, refurbishment or another project’s equity contribution. Alternate Capital structures facilities from €750,000 in Germany, Austria and Switzerland.
How it works
How additional property borrowing works
The starting point is the difference between the current Mortgage lending value of your property and the existing secured debt: its available borrowing capacity. Where sufficient capacity exists, options include increasing the existing loan, arranging subordinated debt or undertaking a full Refinancing.
For example, an apartment building bought for €4.5 million is now worth €6.5 million, with €2.4 million outstanding. At 65% LTV, a loan of approximately €4.2 million could release around €1.8 million of liquidity while the property continues to generate rent and remains in the portfolio.
This is why investors consider additional borrowing within portfolio management: it can release equity while retaining the property and avoiding a sale.
Options
Three ways to release available borrowing capacity
Arrange a second-ranking loan
A second lender lends behind the bank without replacing the existing facility. This can be discreet and relatively quick, with pricing closer to Mezzanine pricing.
Full refinancing
A new lender provides a replacement facility, repaying the existing balance and releasing further capacity. This can be particularly relevant when a fixed-rate period ends.
Requirements
What lenders assess
- Available borrowing capacity: current property value relative to outstanding secured debt, supported by a valuation or credible indication of value.
- Debt servicing capacity: rental income must sustainably cover the higher debt service, with allowances for vacancies and maintenance (glossary explanation).
- Use of funds: acquisitions, capital expenditure or equity for another project. A clear purpose supports lender assessment.
- Property quality: occupancy, condition, alternative-use potential and location influence acceptable leverage.
- Security ranking: For option 2, review the existing financing arrangements and document the land register position carefully.
Applications
How investors use released liquidity
If you plan further acquisitions with the released funds, assess the additional debt service alongside reserves for the existing portfolio. Further reading: Expand your property portfolio with suitable finance.
Acquire additional properties
Equity for the next investment without selling existing properties: an established approach to portfolio growth.
Refurbishment and enhancement
Capital expenditure, energy improvements and repositioning: using available equity to support further property investment.
Project equity
Available borrowing capacity as a source of own funds for development or project finance, potentially at a lower cost than mezzanine alone.
Shareholder matters
Distributions, share acquisitions and inheritance settlements: liquidity can support a solution without a forced property sale.
Liquidity reserves
Retain funds to pursue market opportunities when they arise.
Refinance more expensive facilities
Replace overdrafts or interim facilities with lower-cost property-secured finance.
Media
Additional borrowing podcasts and videos
Podcast
Releasing capital through additional property borrowing
How portfolio owners release equity: structures, requirements and common mistakes.
Original recording in German.
Another episode, “How property professionals use additional borrowing”, is available in the Podcast hub
Original recording in German.
Frequently asked questions
Additional borrowing: quick answers
How quickly can it be arranged?
Option 2, a second-ranking facility, may be possible within three to six weeks with complete documents. Increasing a bank loan or refinancing commonly follows a six-to-twelve-week bank process.
Does the existing bank need to agree?
The existing bank decides whether to increase its own loan. For a second-ranking facility, review the existing agreement and security arrangements. Clear communication remains advisable, and we can coordinate it.
Which properties are suitable?
Rented residential and commercial assets with stable cash flow and sound locations. Stronger occupancy and condition can support higher acceptable leverage.
Are there tax implications?
Borrowing itself does not trigger a tax on the loan amount. Interest deductibility depends on how the funds are used. Your tax adviser confirms the treatment; we provide the financing structure.
Borrowing or selling
Additional borrowing or a sale? Compare the economics
An owner seeking liquidity can consider selling or borrowing against the property. A sale produces proceeds without ongoing debt service, while additional borrowing retains the asset. The appropriate choice requires a full comparison.
Selling involves transaction costs and may have tax consequences. It also transfers future rent and capital growth to the buyer. Additional borrowing retains ownership, creates financing costs and allows the released funds to be reinvested. Tax treatment depends on the circumstances.
As a simplified example, a property worth €2 million rising by 3% annually gains approximately €60,000 in value per year. A sale would give up that future exposure and may involve costs exceeding €100,000. Compare these assumptions with borrowing costs before deciding. Neither capital growth nor the outcome is guaranteed.
A sale can be appropriate if an asset no longer fits the strategy, requires substantial refurbishment or has a weaker outlook. For sound income-producing assets, additional borrowing offers an alternative that preserves ownership. We compare both scenarios for the individual property.
Next step
How much liquidity could your property portfolio release?
Send the property value, outstanding loan and rental income. We will assess realistic borrowing capacity and a suitable structure.
About the author
Jürgen Kronawitter
Jürgen Kronawitter specialises in structured real estate finance. He helps property investors, developers and portfolio owners implement complex financing solutions. His work focuses on structuring and arranging senior loans, whole loans, mezzanine capital and bridge loans, as well as tailored financing for acquisitions, investment properties, developments and refinancing. By combining conventional bank lending with alternative capital sources, he develops financing structures for domestic and international property projects.
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