Private Lenders in Australia

What is a private lender?

A private lender lends money sourced from private investors, a mortgage fund or its own balance sheet, rather than from customer deposits. Because they are not funded by depositors, they are not bound by the same prudential requirements, so they can take a view on a deal a bank's policy would reject outright.

That shows up as flexibility on the things banks are rigid about: unusual security, short terms, borrowers without two years of financials, properties mid-construction, and situations where the exit matters more than the borrower's income. A private lender asks how they get repaid; a bank asks whether you fit the policy.

The trade is cost and term. Private loans are priced well above bank rates and are usually short — months rather than decades — because they are designed to solve a specific problem and then be refinanced or repaid from a sale.

Private lending is a legitimate, established part of the Australian credit market, not a last resort. It funds development, bridging, and time-critical commercial purchases every day. It becomes a problem only when it is used to paper over a deal that never serviced.

Private lender vs bank vs non-bank: the real differences

Banks are cheapest and slowest, with the tightest policy. Non-banks sit in the middle: still regulated funders, more flexible on credit, priced above banks. Private lenders are fastest and most flexible, priced highest, and focused on the security and the exit rather than on your income.

The categories blur at the edges. Some non-banks run private-style products; some private lenders fund at near non-bank pricing on strong, low-LVR security. Compare the actual offer rather than the label.

When a private lender is the right choice

Private lending earns its premium when timing decides the outcome, or when no bank will look at the security. A settlement date you cannot move, an auction purchase before your existing property sells, or a development that needs funding before presales are achieved are the classic cases.

It also fits where the borrower does not present well on paper but the deal plainly works: a self-employed buyer whose returns lag their trading, a company mid-restructure, or a purchase where the value is in the asset rather than in the income of the person buying it.

The test is whether you have a credible exit. Private loans are short by design, so the question is always what repays this: a sale, a refinance to bank funding, or a project completing. If the honest answer is that you will worry about it later, the loan is dangerous at any rate.

It is the wrong choice where a bank would say yes if you waited a few weeks, and where the loan is being used to service other debt rather than to fund something that generates a return.

What private lending costs

Expect a rate well above bank pricing, plus establishment and legal fees, valuation costs, and often a line fee or an exit fee. Quoting a number here would mislead: pricing varies enormously with LVR, security quality, term and how quickly you need it.

What is stable is what moves the price. A first mortgage over clean residential security at conservative LVR prices far lower than a second mortgage over a partly built development. Speed costs extra. So does complexity in the security.

Ask for the total cost of the facility over the period you actually expect to hold it, not the rate. On a six-month bridging loan, upfront fees can outweigh the interest, so a lower rate with heavier fees is often the dearer deal.

How fast can a private loan settle?

Days rather than weeks, and sometimes within 48 to 72 hours on a straightforward first mortgage where the valuation and legals can be turned around quickly. That speed is the main reason people pay the premium.

What actually sets the timeline is rarely the credit decision. It is the valuation, the searches and the legal documentation. A recent valuation, clean title and a responsive solicitor compress the process more than anything the lender does.

Complexity slows it down predictably: second mortgages need the first mortgagee's consent, company or trust borrowers need their structures verified, and partly built security needs a quantity surveyor. Flag these at the outset rather than having them surface late.

If a lender promises settlement in a timeframe that ignores valuation and legals, treat it as a warning rather than a selling point.

How to check a private lender is legitimate

Check they hold or are authorised under an Australian Credit Licence where the loan is consumer-regulated, confirm the ABN and company details on ABN Lookup and ASIC, and insist on written terms before paying anything.

The single strongest warning sign is a substantial upfront fee demanded before any assessment, valuation or written offer. Legitimate costs — valuation, legal work — are real, but they are disclosed, itemised and usually paid to the provider of that service rather than to the lender as a lump sum.

Read the default terms as carefully as the rate. Default interest rates, the notice period, and what triggers a default are where private lending differs most from bank lending, and they matter precisely when things are not going to plan.

Get your own solicitor to review the documents. Not the lender's recommended solicitor, and not nobody — the security documents are where the real risk sits, and they are not standardised the way bank documents are.

Browse private lenders by state

Lending policy varies by state because the security does: state stamp duty, land tax treatment and the pace of local property markets all feed into what a lender will advance and on what terms.

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