Business owner reviewing property-secured private lending documents in Australia

What Is Private Lending?

Private lending is non-bank finance provided by a specialist lender rather than a traditional bank. In Australia, private loans are commonly secured by real estate and used by eligible business owners, property investors, developers and commercial borrowers who need a practical funding solution for a time-sensitive, complex or non-standard scenario.

At Assurity Capital, private lending is property-secured finance for eligible business, commercial and investment purposes. We assess each scenario based on the security property, total debt position, purpose of the loan and a clear, realistic exit strategy.

Private lending is not a consumer personal loan and is not designed to replace a long-term owner-occupied home loan. Assurity Capital does not provide consumer-purpose personal loans or owner-occupied home loans.

How Does Private Lending Work?

A private lender provides funding secured by an asset, usually Australian real estate. The borrower grants a mortgage over the property, and the loan is documented through formal legal agreements.

Unlike a standard bank loan, private lending can be more focused on the individual transaction.

Rather than relying only on a standardised income and serviceability model, a private lender may consider:

The location, type, value and marketability of the security property
Existing mortgages and other debt secured against the property
Whether the loan will be a first mortgage or second mortgage
The requested loan amount and total loan-to-value ratio
The genuine business, commercial or investment purpose
The required settlement timeframe
The borrower’s exit strategy, including how the loan will be repaid

Private lending is generally short-term finance. It should have a defined purpose and a documented plan for repayment at or before the end of the loan term.

What Is a Private Lender?

A private lender is a non-bank lender that provides finance outside the major-bank lending model. Private lenders can consider scenarios that may be difficult for a bank to assess quickly because of timing, property type, borrower structure, credit history, documentation requirements or an existing mortgage.

Private lending does not mean informal lending. A properly structured private loan involves credit assessment, property-security review, loan terms, legal documentation, mortgage registration where applicable and settlement procedures.

The flexibility of private lending comes from assessing the full scenario. It does not remove the need for acceptable security, sound documentation or a realistic repayment strategy.

Why Do Borrowers Use Private Lending?

Private lending may be useful when a borrower has property equity but needs funding more quickly or more flexibly than a traditional lender can provide.

Common reasons eligible borrowers consider private finance include:

An urgent commercial or investment property settlement
Refinance of an expiring private loan, second mortgage or caveat-related arrangement
Bridging finance while waiting for a property sale or longer-term refinance
Short-term business cash flow or working capital
Business expansion, stock purchases or supplier payments
Eligible business-related ATO debt or creditor obligations
Debt consolidation for business or investment liabilities
Property development, development completion or residual stock funding
A bank decline where the borrower still has suitable property security and a credible exit strategy
A short-term opportunity that cannot wait for a standard bank process

Private lending should be used because it is appropriate for the transaction, not simply because it is available.

What Is the Difference Between Private Lending and Bank Lending?

A bank generally uses standard credit policy, detailed income verification, serviceability calculations, credit scoring and set product rules. This can work very well for straightforward long-term lending, but it may be difficult where the transaction is urgent, complex or outside policy.

Private lending can offer a more scenario-based assessment for eligible borrowers. A private lender may place greater emphasis on property security, equity, debt position, loan purpose and exit strategy.

That does not mean a private loan is automatically easier to obtain. Private finance still requires proper assessment, and interest rates, fees and loan terms may be higher or shorter than mainstream bank finance. Borrowers should compare the total cost, risks and repayment requirements before proceeding.

What Is a First Mortgage Private Loan?

A first mortgage is a loan secured by a first-ranking mortgage over property. The first mortgage lender has priority over other secured lenders in relation to that property.

A first mortgage private loan may be considered when an eligible borrower needs property-backed funding for a business, commercial or investment purpose. This may include commercial acquisitions, refinance, bridging, development, urgent settlement funding or secured business finance.

Relevant Assurity Capital pages to link:

First Mortgage Loans
Startup Business Finance
Short Term Business Loans
Secured Business Loans
Residual Stock Finance
Bridging Loans
Investment for Commercial Purposes
Low LVR Loans Under $1m

What Is a Second Mortgage Private Loan?

A second mortgage is a loan secured against property that already has an existing first mortgage. The first mortgage lender has priority, while the second mortgage lender ranks behind the first lender.

A second mortgage can allow an eligible borrower to access available property equity without necessarily refinancing their existing first mortgage. This can be useful where the existing first mortgage has favourable terms, but the borrower requires additional short-term capital for a business, investment or commercial purpose.

The combined debt position is important. The lender will consider the existing first mortgage, the proposed second mortgage, the assessed property value and the borrower’s exit strategy.

What Is LVR in Private Lending?

LVR means loan-to-value ratio. It is a measure of the total debt secured against a property compared with the property’s assessed value.

For example, if a property is valued at $1,000,000 and the total secured debt is $600,000, the LVR is 60%.

For a second mortgage, the lender looks at the combined LVR. This includes the existing first mortgage plus the proposed second mortgage. A lower LVR can provide a stronger equity position, but it is only one part of the assessment. Property type, location, loan purpose, mortgage priority and exit strategy also matter.

What Is an Exit Strategy?

An exit strategy is the borrower’s defined plan to repay the private loan at or before the end of the agreed term.

A clear exit strategy is one of the most important parts of a private-lending application. Common exit strategies include:

Sale of the security property
Sale of another property or asset
Refinance to a bank or non-bank lender
Settlement of a pending transaction
Completion and sale of a development
Business proceeds or another documented source of repayment

A private loan should not be used without a realistic and evidence-based repayment plan. The borrower should consider what happens if the proposed sale, refinance or transaction is delayed.

Can Private Lending Help After a Bank Decline?

A bank decline does not automatically mean that private finance is unavailable. Banks and private lenders can assess risk differently.

A bank may decline a loan because of income verification, serviceability calculations, borrower structure, credit history, property type, timing or internal policy. A private lender may still consider an eligible application where there is acceptable property security, sufficient equity, a genuine business or commercial purpose and a credible exit strategy.

However, private lending is not guaranteed finance for bad credit or a substitute for a sustainable repayment plan. Credit history, existing debt and the circumstances behind a bank decline can still be relevant.

Can Self-Employed Borrowers Use Private Lending?

Eligible self-employed borrowers may consider private lending where mainstream lending documentation does not accurately reflect their current position or available property equity.

For example, a business owner may have non-standard income, recently changed business structure, seasonal cash flow, incomplete financial-year documentation or a time-sensitive commercial need. The private-lending assessment will still focus on the security property, loan purpose, debt position and exit strategy.

Can a Private Loan Be Used for Business Cash Flow?

A property-secured private loan may be considered for eligible short-term business cash flow or working-capital requirements.

This may include supplier payments, stock purchases, wages, expansion costs, urgent commercial liabilities or a temporary timing gap while longer-term finance, an asset sale or a business transaction is completed.

Private finance should not be used to mask a long-term cash-flow problem. The purpose of the loan and the exit strategy must be commercially sensible.

Business Cashflow and Expansion Loans

Can a Private Loan Be Used to Pay ATO Debt or Creditors?

A property-secured private loan may be considered for genuine business or investment-related ATO obligations, creditor payments and urgent commercial liabilities.

The borrower should understand the full cost and consequences of replacing existing debt with a private loan. Independent legal, tax and accounting advice may be important where ATO debt, creditor pressure, guarantees or business restructuring is involved.

ATO & Creditor Payment Loans

What Is Bridging Finance?

Bridging finance is short-term property-secured funding that helps bridge the gap between two financial events.

For example, an eligible borrower may need to settle on a commercial or investment property before another property is sold, before a refinance is complete or before a development reaches a milestone. The private loan provides temporary funding while the defined exit event occurs.

A bridging-loan application needs clear timing, property details, existing debt information and a strong exit strategy.

Bridging Loans

Can Private Lending Be Used to Refinance Another Private Loan?

Yes, refinance may be considered for eligible borrowers with an expiring private loan, caveat-related arrangement, second mortgage or other property-secured business or investment debt.

The new loan must have a clear commercial purpose and a realistic path to repayment. Simply extending short-term debt without addressing the underlying repayment issue may not be suitable.

Refinancing Private Lenders or Caveats

What Is Secured Business Finance?

Secured business finance is a loan supported by security, such as real estate. At Assurity Capital, eligible secured business loans are property-backed and assessed on the security, total debt, business purpose and exit strategy.

This can differ from unsecured business lending, where approval often relies more heavily on business income, turnover, credit profile and cash flow.

Secured Business Loans

How Quickly Can a Private Loan Settle?

Some straightforward private-lending scenarios can settle in as little as three to five business days, but settlement timeframes are not guaranteed.

Timing can depend on:

The quality of the information provided at the start
Property assessment and valuation requirements
Existing first mortgage or discharge requirements
Borrower entity documents
Legal documentation
Solicitor availability
The complexity of the security
Final lending approval and satisfaction of conditions

Urgent scenarios should be submitted as early as possible with the property details, required loan amount, purpose, settlement date and exit plan.

What Documents Are Needed for a Private Loan Application?

The required documents vary, but an initial assessment is generally stronger when the borrower can provide:

Property address and details of the proposed security
Estimated property value or recent valuation, if available
Existing mortgage balances and current payout figures
Requested loan amount
Clear explanation of the loan purpose
Borrower entity details, including company or trust information where relevant
Contract of sale, refinance statement or creditor payout information where applicable
Required settlement date
A clear exit strategy and supporting evidence

The earlier this information is provided, the easier it is to assess whether private lending may be appropriate.

What Fees and Interest Apply to Private Lending?

Private-loan interest rates, fees and terms are determined case by case. They can vary depending on the property security, mortgage position, loan amount, LVR, term, borrower structure, urgency, purpose and exit strategy.

Potential costs can include interest, establishment fees, legal fees, valuation fees, discharge fees, extension fees and other transaction-specific costs. Borrowers should ask for a full explanation of the proposed costs, when they are payable and how they affect the total amount repayable.

Do not compare private loans on the interest rate alone. Consider the total cost of the facility, the term, the repayment structure, the exit strategy and the consequences if the loan is not repaid on time.

What Happens If a Private Loan Is Not Repaid?

If a borrower cannot meet the obligations under a private loan, the lender may exercise rights under the loan and security documents. This can include default interest, enforcement costs and action against the property used as security, subject to the legal documents and applicable law.

Private lending can carry significant risk because real property may be used as security. Borrowers should obtain independent legal advice before signing loan and mortgage documents and seek assistance early if their exit strategy is at risk of delay.

Is Private Lending Suitable for Me?

Private lending may be suitable where all of the following are present:

A genuine business, commercial or eligible investment purpose
Acceptable Australian real-estate security
Sufficient equity after existing debt
A clearly defined short-term funding need
A realistic exit strategy
An understanding of the interest, fees, term and property-security risks

It may not be appropriate if the loan is for personal expenses, owner-occupied home lending, long-term unsustainable debt or a scenario without a credible source of repayment.

Submit a Private Lending Scenario

To discuss an eligible property-secured private-lending scenario, contact Assurity Capital with:

The property address
Requested loan amount
Existing mortgage balances
Purpose of funds
Required timing
Proposed exit strategy

Call 02 9389 1077 or email scenario@assuritycapital.com.au.

General information only. Finance is subject to assessment, acceptable security, genuine business, commercial or investment purpose, lender criteria, fees, legal documentation and approval. Terms, rates, fees, loan amounts and settlement timeframes vary by transaction.

Assurity Capital does not provide personal loans or consumer-purpose owner-occupied home loans.