Private Lenders in Australia: How Private Mortgage Loans Work for Business and Property Funding
A private lender is a non-bank lender that provides short-term finance secured by real estate. In Australia, private lending is commonly used by business owners, investors, developers and property professionals who need a flexible property-backed loan when a bank is too slow, unavailable or unsuitable for the transaction.
Private mortgage loans are assessed differently from standard bank loans. Rather than relying only on PAYG income, tax returns and rigid servicing policies, a private lender considers the security property, available equity, loan-to-value ratio (LVR), purpose of funds and—most importantly—the exit strategy.
At Assurity Capital, private first mortgages and second mortgages are considered for genuine business and investment purposes only. Finance is not available for consumer or owner-occupied personal lending.
What is a private lender?
A private lender provides funding outside the traditional banking system. Private lending capital may come from specialist lending businesses, private investors, funds or other non-bank sources.
For borrowers, the practical difference is the assessment approach.
A bank will generally focus heavily on income, serviceability, financial statements and standard policy requirements. A private lender may assess the broader commercial scenario, including:
The value and marketability of the property offered as security.
Existing mortgages and payout figures.
Available equity.
LVR or combined LVR.
The borrower’s business or investment purpose.
The timing of the transaction.
The proposed exit strategy.
Private lending is not “easy money” or automatic approval. It is a serious, property-secured funding solution designed for defined, short-term business or investment requirements.
How does private lending work in Australia?
A private loan is usually secured by a registered first mortgage or second mortgage over residential, commercial, industrial, investment or other acceptable property.
The lender reviews the full scenario before deciding whether the loan is suitable.
A typical private lending process may involve:
Reviewing the property address, ownership and estimated value.
Confirming existing debt, mortgages, caveats or other registered interests.
Assessing the required loan amount and purpose.
Calculating the LVR or combined LVR.
Reviewing the borrower’s proposed exit strategy.
Obtaining valuation, legal, company, trust or other documentation where required.
Issuing terms and completing legal documentation if the loan is approved.
The exact process, timing and documents depend on the property security, ownership structure, existing lender position and complexity of the transaction.
What is a private mortgage loan?
A private mortgage loan is a loan secured by real estate and provided by a private or non-bank lender.
There are two common structures:
Loan structure | How it works |
Private first mortgage | The private lender takes first-ranking security over the property, often to purchase, refinance or consolidate an existing facility. |
Private second mortgage | The private lender takes security behind an existing first mortgage, potentially allowing the borrower to access equity without refinancing the first loan. |
A first mortgage lender has priority if the property is sold or enforcement action occurs. A second mortgage lender ranks behind the first mortgage, which usually creates greater lender risk and may affect pricing, LVR and terms.
Why do borrowers use private lenders?
Australian borrowers commonly consider private finance when the funding requirement is time-sensitive, complex or does not fit standard bank policy.
Examples may include:
Urgent settlement funding.
Business working capital.
Private-loan or short-term-loan refinancing.
ATO debt or eligible business debt consolidation.
Property investment opportunities.
Commercial property purchases.
Development-related costs.
Construction or renovation completion.
Bridging finance before a property sale.
Releasing equity from a residential or commercial property for business purposes.
Funding needed before a bank or non-bank refinance can be completed.
A private loan should have a clear purpose and a realistic repayment pathway. It should not be used to delay a financial problem without a credible solution.
Can I get a private loan with bad credit?
Potentially.
A poor credit history does not automatically prevent a borrower from obtaining private property-backed finance. However, credit history, repayment conduct and borrower circumstances may still be relevant.
Private lenders often focus strongly on:
Security property quality and value.
Current debt against the property.
Available equity.
LVR or combined LVR.
Loan purpose.
Borrower experience and transaction background.
The certainty and timing of the exit strategy.
A borrower with bad credit still needs a commercially sensible scenario. Private lending is assessed case by case and approval is never guaranteed.
Can I get a private loan without financials?
Potentially, depending on the transaction.
Private lenders may take a more security-focused approach than mainstream lenders, particularly for short-term property-backed business or investment loans. This can be relevant for self-employed borrowers, developers, investors or business owners whose financial position does not fit a standard bank application.
However, “no financials” does not mean “no assessment”.
The lender may still require information about the borrower, property, existing debt, loan purpose and exit strategy. Further documents may be required where the loan is held in a company, trust, SMSF or multiple-party structure.
What is LVR in private lending?
LVR means loan-to-value ratio. It compares the amount of debt secured against a property with the lender’s accepted property value.
For example:
Property value: $2,000,000
Proposed private first mortgage: $1,100,000
The LVR is:
$1,100,000 ÷ $2,000,000 × 100 = 55%
For a private second mortgage, the lender calculates the combined LVR by including both the existing first mortgage and the proposed second mortgage.
For example:
Property value: $2,000,000
Existing first mortgage: $850,000
Proposed second mortgage: $250,000
Total debt after settlement: $1,100,000
The combined LVR is 55%.
A lower LVR can provide a stronger equity buffer, but it does not guarantee approval. The property, purpose, existing debt and exit strategy must also be appropriate.
How quickly can a private loan settle?
Private lending can often be assessed more quickly than a conventional bank application where the scenario is straightforward and required information is available promptly.
However, no approval or settlement timeframe should be assumed.
Timing can be affected by:
Property valuation requirements.
Existing lender payout figures.
First or second mortgage ranking.
Legal documentation.
Ownership structure.
Company, trust or SMSF requirements.
The borrower’s loan purpose and exit strategy.
Any existing caveats, mortgages or other security interests.
If a borrower has an urgent settlement, refinance deadline or time-sensitive opportunity, they should provide the property address, loan amount, existing debt, purpose, settlement date and exit plan as early as possible.
What does a private lender look for?
A private lender does not simply assess whether property has equity. The lender needs to understand whether the overall transaction makes commercial sense.
Key assessment factors include:
Property security
The property’s type, location, ownership, condition, value and marketability are important. Residential, commercial, industrial, investment, rural and development properties may be considered, subject to lender criteria.
Existing debt
The lender needs accurate details of all mortgages, caveats and other liabilities secured against the property. Current payout figures are particularly important for refinance scenarios.
Loan purpose
Private finance must have a genuine business or investment purpose. The lender will assess why funds are required and whether the proposed use is appropriate.
LVR or combined LVR
The total debt after settlement must remain suitable relative to the lender’s accepted property value.
Exit strategy
An exit strategy explains how the private loan will be repaid at the end of its term. This is a core part of every private-lending assessment.
What is an exit strategy for a private loan?
An exit strategy is the borrower’s evidence-based plan to repay the loan.
Common private-loan exits include:
Refinancing into a bank or non-bank facility.
Sale of the secured property.
Sale of another asset.
Completion and sale of a property development.
Completion of a renovation followed by sale or refinance.
Funds from a verified business transaction, capital event or asset sale.
A lender will consider whether the proposed exit is realistic within the loan term.
For example, a refinance exit should account for future serviceability, property value and lender criteria. A sale exit should account for current market conditions, likely selling timeframes and property marketability.
Private lender vs bank: what is the difference?
Private lenders and banks can both provide property-backed finance, but they generally serve different needs.
Factor | Bank loan | Private loan |
Assessment | Often policy and serviceability driven | Focuses on property security, equity, purpose and exit |
Documentation | Usually more extensive | Varies by scenario; may be more streamlined for eligible transactions |
Timing | May take longer, especially for complex scenarios | May be faster when the scenario and documents are ready |
Loan term | Often structured for longer-term lending | Commonly short-term |
Flexibility | Usually more standardised | May be tailored to a specific property or transaction |
Cost | May be lower for eligible mainstream borrowers | May involve higher interest, fees and costs |
Neither option is automatically better. A bank loan may be more appropriate for a longer-term facility with strong serviceability. A private loan may be more appropriate where timing, security or a complex transaction requires a short-term property-backed solution.
What are the costs and risks of private lending?
Private lending can provide flexibility, but it can be more expensive than mainstream finance. Interest rates, establishment fees, legal costs, valuation costs and other charges may apply.
Borrowers should understand:
The total loan amount required.
The interest rate and all fees.
Whether interest is paid monthly or capitalised.
The term and maturity date.
The total debt secured against the property.
The LVR or combined LVR.
The consequences if the property value falls.
The consequences if the exit is delayed or cannot be achieved.
Because private loans are secured by property, borrowers risk enforcement action and loss of the secured property if repayment obligations are not met. Independent legal, financial and tax advice should be obtained where appropriate.
Private lenders in Sydney, NSW and Australia
Assurity Capital assists business owners, investors and property professionals across Sydney, NSW and Australia with private property-backed finance.
We consider private first mortgages, second mortgages, bridging finance, debt consolidation and short-term business funding where there is suitable property security, an eligible business or investment purpose and a realistic exit strategy.
Whether the requirement is a property refinance, equity release, business funding, urgent settlement or time-sensitive investment opportunity, each scenario is assessed individually.
Finance is subject to assessment, suitable security, eligibility, lender criteria, fees, approval and a realistic exit strategy.
Apply with Assurity Capital Today!
What is a private lender in Australia?
A private lender is a non-bank lender that provides finance from private, specialist or non-bank sources. Private loans are commonly secured by real estate and used for short-term business or investment purposes.
Are private lenders safe?
Private lending is a serious form of property-backed finance. Borrowers should understand the lender, loan terms, security documents, total costs and exit strategy, and obtain independent legal, financial and tax advice where appropriate.
Can private lenders lend against residential property?
Potentially, yes. Residential property may be accepted as security for an eligible business or investment-purpose loan, subject to assessment. Assurity Capital does not provide consumer or owner-occupied personal lending.
Can I refinance a private loan with another private lender?
Potentially. A new private lender may consider refinancing an existing facility where there is suitable property security, sufficient equity, an eligible purpose and a realistic exit strategy.
Do private lenders require an exit strategy?
Yes, generally. Because private mortgage loans are commonly short-term, the lender needs a clear and realistic plan for how the loan will be repaid at maturity.
Are private loans short-term?
Often, yes. Private property-backed loans are commonly used to solve a defined, short-term business or investment funding requirement before a sale, refinance or other verified exit.
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