What Is a Priority Amount in a Mortgage?

If you've reviewed your property's title after securing a home loan, you may have spotted something unexpected. Your mortgage might be listed on the title with a much higher figure than the amount you actually borrowed. This number is called the priority amount, and while it might look alarming, it's not as dangerous as it seems-provided you understand how it works.

Priority Amount vs Loan Amount: What's the Difference?

The loan amount is what you actually borrow from the bank. For example, if you're borrowing $700,000 to buy your home, that's your loan amount.

The priority amount, on the other hand, is the figure registered on your certificate of title-usually much higher than your loan. It's not what you owe. Instead, it sets the maximum amount the lender has legal priority over if they ever need to recover their money by selling the property.

It's essentially a legal buffer. It covers not only your initial loan, but also:

• •Future top-ups or increases to your mortgage
• •Unpaid interest
• •Enforcement costs (e.g., legal fees or recovery costs if you default)
• •Penalty interest if applicable

So while you may only owe $700,000, the priority amount listed might be $850,000 or more.

Why Is There a Priority Amount?

Banks include a priority amount to protect their legal interest in your home. In the unlikely event you default and your property is sold, the bank wants to ensure it can recover:

By registering a higher priority amount on the title, the lender secures a wider financial safety net.

Does It Mean You Owe More Money?

No. The priority amount does not mean the bank can demand the full figure listed on the title unless you've actually borrowed that much. You're only ever liable for what you agreed to in your loan contract.

In other words: Priority amount ≠ loan balance.

But it does mean the bank can legally be repaid up to that amount before any other creditors can claim a share of the sale proceeds.

Will This Affect You When Selling or Refinancing?

For most borrowers, the priority amount is simply a legal formality that has no impact unless you:

• •Apply for a second mortgage: A second lender may want to know how much "space" is left beneath the priority amount
• •Top up your loan: The priority amount may already cover the new balance-saving time and legal fees
• •Sell your home: Your lawyer will ensure only the actual loan balance is paid-not the full priority amount

Can You Change the Priority Amount?

In most cases, the lender will set the priority amount. However, if you're working with a second lender or want more flexibility, your lawyer can request a variation-although banks don't always agree.

Be aware that a low priority amount can restrict your ability to top up your loan in future.

Priority Amounts and Cross-Collateralisation

Understanding priority amounts becomes more important when you own multiple properties secured with the same lender-a situation called cross-collateralisation.

What is cross-collateralisation? When you use equity in one property (typically your home) to help secure lending on another property (like an investment), the bank may register mortgages against both properties. This links them together as security for your total lending.

How priority amounts work across properties: With cross-collateralised lending, the bank's priority amounts across your properties collectively secure all your loans. For example:

• •Your home might have a priority amount of $800,000
• •Your investment property might have a priority amount of $600,000
• •Your total actual lending might be $900,000

The bank has $1.4 million in total priority amount coverage across both properties, giving them significant security buffer and flexibility.

Why this matters when selling: If you sell one cross-collateralised property, the bank can use the sale proceeds to reduce your overall debt-potentially more than you expect. They may require funds to stay in the remaining loan rather than releasing cash to you.

Releasing a property from cross-collateralisation: If your remaining property has sufficient equity, you can ask the bank to release a sold property from the mortgage structure. Your lawyer and broker can help negotiate this, though banks aren't obligated to agree.

Split banking alternative: Property investors often avoid cross-collateralisation by using different banks for different properties. This keeps properties independent, ensuring sale proceeds from one property remain under your control rather than being captured by the bank to reduce overall debt.

Final Word: Understand It, But Don't Stress

The priority amount exists to protect lenders and give them flexibility when securing their loans-but it doesn't mean you owe more than what's in your loan agreement.

When buying a property, your lawyer will typically explain the priority amount. If you're unsure, don't hesitate to ask them to clarify how it might affect your situation-especially if you own or plan to own multiple properties.