Connect with 200+ Verified Private Lenders & Brokers

What are private loans and private lenders?

A private loan is finance from a lender that does not take deposits from the public. It lends private capital instead: its own money, money pooled from investors, or funds from wholesale and institutional backers. Because it sets its own credit policy, a private lender can consider a deal that a bank's standard rules would decline.

Private loans are generally secured against real property: a house, units, land or a commercial building. They are usually short term and built around a clear purpose and a clear way out, called the exit. The lender prices for that flexibility, so a private loan generally costs more than a bank loan.

Where private funding comes from

• Lending businesses that lend their own capital and make each credit decision in-house.
• Mortgage funds that pool money from many investors and lend it against property, with a manager who assesses and runs each loan.
• Private credit funds backed by wholesale or institutional investors, which tend to fund larger commercial, development and business loans.
• Family offices and experienced investors, usually lending through a company or a fund manager rather than in their own name.

Private lenders vs non-bank lenders vs banks

Banks lend their depositors' money and follow standardised credit policy. They usually offer lower rates and longer terms, but want evidence that fits their rules: recent tax returns, steady income, clean credit and a property type they are comfortable with.

Non-bank lenders do not take deposits either. They generally fund loans from wholesale markets and investors and sell standard products with long terms, but tend to be more flexible on how income is shown, such as low doc loans for the self-employed, and on past credit problems.

Private lenders sit at the most flexible end. They judge each deal on its merits, lend against property and situations others will not, and can often work to a tight settlement date when the security and the exit are clear. In return, terms are shorter and costs are higher.

First, second and third-tier lenders

You may hear the major banks called first-tier lenders, smaller banks or mainstream non-bank lenders second-tier, and private lenders third-tier. The labels are informal and the lines blur. What matters is each lender's terms, not its tier.

Private loans from individuals: who the lenders really are

Many people search for private individuals that loan money, picturing one person lending their savings. In practice, most private lending is done by lending businesses and funds. Individual investors usually take part through a fund or a lending business, which assesses the deal, prepares the documents, holds the mortgage and manages the loan.

Borrowing directly from an individual you do not know is possible, but it needs extra care. No lending business stands behind the paperwork, and a dispute or a change of heart before settlement can leave you without funds on the day you need them.

If you deal with an individual lender

• Confirm who they are: full name, any company and ABN, and who will be the mortgagee on the title.
• Have your own solicitor prepare or review the loan agreement and the mortgage. Never sign the lender's documents unread.
• Settle through solicitors' trust accounts, never with cash or a transfer to a personal account.
• Get in writing where the funds are coming from and when they will be available.
• Walk away from anyone who offers a loan through social media, or asks for a fee before a written offer.

When a private loan makes sense, and when it does not

A private loan is a tool for a specific job. It works when what the money makes possible outweighs the cost, and when the way out is clear from the start.

It can make sense when

• Your settlement date is close and a bank cannot work to it.
• A bank has declined because of its policy rather than the deal itself, for example an unusual property or a recent change in your business.
• You are self-employed and your tax returns lag what the business earns now.
• Past credit problems are behind you and you can explain them, but a bank still counts them against you.

It is usually the wrong choice when

• There is no realistic exit, or the exit depends on property prices rising.
• You need long-term finance that a bank or non-bank lender would offer at a lower ongoing cost.
• The money would cover ongoing losses or debts you cannot service now.
• The money is for personal spending: ADS.finance does not do personal loans.
• You could not afford the interest and fees if the loan ran longer than planned.

What private lending is used for

Private loans cover a wide range of property, commercial and business needs. These are the most common uses.

Bridging loans

A bridging loan covers the gap between buying one property and selling another, or between a purchase and a longer-term loan. The lender looks at both properties and at the sale or refinance that will repay it. Interest is often capitalised, meaning it is added to the balance rather than paid monthly.

Second mortgages and caveat loans

A second mortgage lets you borrow against the equity left in a property that already has a first mortgage. The second lender ranks behind the first, so it looks at the total debt on the property, and your first mortgage may require that lender's consent.

A caveat loan is secured by a caveat, a notice lodged on the title recording the lender's interest, instead of a registered mortgage. Caveat loans are short term, used for urgent business needs, and usually cost more because the lender has less protection.

Construction and development finance

Private lenders fund site purchases, construction and residual stock, meaning finished units still to sell. They assess the project's costs, the builder, any presales and the end value, and release money in stages as the work progresses.

Commercial property loans

Offices, shops, warehouses and specialised property can fall outside a bank's appetite, especially with a short lease or a vacant building. A private lender looks at the property, the lease position and how the loan will be refinanced or repaid.

Business loans secured by property

Business owners use private funding for working capital, buying a business, settling a tax debt or taking up an opportunity, with real property as security. The lender wants to understand the business and the exit, not only the property.

Self-employed borrowers whose returns lag

If your business has grown but your last lodged tax return does not show it, a bank may decline. A private lender can consider current trading evidence, such as business activity statements, an accountant's letter and bank statements, as a short-term step until your returns catch up and you can refinance.

How private lenders assess a deal

Private lenders are often called asset-based lenders because the security comes first. But a reputable lender does not lend on security alone. Expect questions on four things.

The security

The lender wants to know what the property is, where it is, its condition and how easily it would sell if things went wrong. A house in an established suburb is simpler than vacant rural land or a specialised building. The lender orders its own valuation from an independent valuer.

Loan-to-value ratio

The loan-to-value ratio, or LVR, compares the loan with the property's value. The lower the LVR, the more equity cushions the lender if the property must be sold. For a second mortgage, the lender counts all debt secured on the property, not only its own loan.

For a development, lenders also look at loan-to-cost, which compares the loan with the total cost of the project. Each lender sets its own limits by property and project type.

The exit

The exit is how the loan will be repaid: a sale, a refinance, the end of a project or business cash flow. Lenders want an exit that is realistic, backed by evidence and achievable within the term with time to spare.

Your story

Lenders want to know why you need private funding and why now. Be upfront about a declined bank loan, credit defaults, tax debts or legal matters. A clear explanation with documents builds confidence; a problem that surfaces late often ends the deal.

What do private loans cost?

Private loans cost more than bank loans, and the cost comes in several parts. Each lender sets its own rates and fees, so get every item in writing before you commit.

Costs to expect

• Interest, usually charged monthly. It may be paid each month, prepaid for part of the term out of the loan, or capitalised onto the balance.
• An establishment fee for setting up the loan, often deducted from the loan amount at settlement.
• Legal fees: you generally pay the lender's solicitor as well as your own.
• A valuation fee for the lender's independent valuation, usually payable even if the loan does not go ahead.
• Brokerage, if a broker arranges the loan: paid by you, by the lender or both, so ask which.
• Line or administration fees on some facilities, and a discharge fee to remove the mortgage when you repay.
• Default interest: a higher rate if you miss a payment or the loan runs past its expiry date. Check whether it is charged on the whole balance.
• Extension fees, and any minimum interest period you pay for even if you repay early.

Compare the total cost to your exit date

The headline rate is only part of the price. A loan with a lower rate but a high establishment fee, a minimum interest period or costly extensions can cost more than one with a higher rate. What matters is the total you pay from settlement to the day the loan is repaid.

1. Work out your realistic exit date, then add a margin for delays.
2. Ask each lender, in writing, for every fee and the total cost to that date.
3. Ask what more time would cost: extension fees, a new rate or default interest.
4. Compare the net amount you receive at settlement, after fees taken from the loan.

Risks of private lending and how to protect yourself

Private lending is legitimate and widely used, but it is short-term secured debt at a higher cost. If the exit fails, you can lose the property. These steps reduce the risk.

• Know who the lender is: check the business name and ABN, and who will hold the mortgage or caveat.
• Read every document with your own solicitor: the offer, the loan agreement, the mortgage and anything a guarantor must sign.
• Never pay a large upfront fee before you have a written offer. A request for money to "release funds" or "secure the loan" is a common sign of a scam.
• Check the extension terms before you sign: whether an extension is available, what it costs and who decides.
• Know the default terms: default interest, enforcement costs and what happens if a payment is late.
• If directors or anyone else must sign as guarantors, each should get independent legal advice.
• Keep a buffer for interest and costs in case the exit takes longer than planned.

Some lenders will ask you to confirm in writing what the loan is for. Make sure that statement is true, because the purpose of a loan affects which rules cover it.

Unsecured or no credit check private loans: what to know

Some people search for unsecured private lenders or private lenders with no credit check. Private loans for property, commercial and business purposes are generally secured against real property, because the security is what lets a private lender look past things a bank will not.

Expect a lender to check your credit before it lends. A lender you choose to deal with will generally need your consent before it checks your credit file, and will want to understand any defaults. Private lenders weigh credit history differently from a bank, but they still read it.

Posting a loan request on ADS.finance involves no credit check. Be wary of anyone who offers money with no checks and no questions: that is a common pattern in loan scams.

Private lenders near me: Melbourne, Sydney, Brisbane and beyond

People often search for private lenders in Melbourne, Sydney, Brisbane or simply near me. Most private lenders lend Australia-wide, because they lend against the property, not your postcode. Where the security sits matters more than where the lender has its office.

Location shapes the deal through the property: how deep the local market is, how readily similar property sells and how a valuer will see it. A unit in an inner suburb, a house in a regional town and a rural holding are three different risks, sized and priced differently.

Regional and rural borrowers can still find private funding, though fewer lenders take rural land or specialised farm property. Most of the process happens by phone, email and video, and solicitors handle settlement, so the lender rarely needs to be local.

Private lender or broker: who should you deal with?

You can go to a private lender directly, or through a mortgage broker or commercial finance broker. Both kinds of business are part of the ADS.finance network.

Going direct to a lender

You speak with the people who make the decision and see that lender's terms first-hand. But you compare offers yourself, and one lender only knows its own appetite.

Using a broker

A broker who works in private lending knows which lenders suit which deals, presents your loan the way lenders expect and compares the terms on offer. Ask how the broker is paid, whether by you, the lender or both, and get any brokerage fee in writing.

Plan the exit before you borrow

Take out a private loan with the exit already planned. Lenders ask about it first, and the cost grows the longer a loan runs past its term.

• Sale: allow time to list, sell and settle, and for a price below what you hope for.
• Refinance: talk to the refinancing lender or a broker before you take the private loan, and find out what they will need.
• Project completion: allow for construction delays and for finished stock taking longer to sell.
• Business cash flow: show the numbers, and have a fallback if trading dips.

Have a second exit in case the first slips. Start the refinance or sale early, keep your tax returns and financial statements up to date, and talk to your lender before the expiry date, not after it.

How to get a private loan through ADS.finance

ADS.finance is a loan marketplace, not a lender. It does not lend money, does not give financial or credit advice and does not recommend any lender or loan. You post one loan request, and ADS checks every loan request before it goes live to the network.

The network is 200+ Australian Finance Providers: private lenders, non-bank lenders, mortgage brokers and commercial finance brokers. Each one is verified: ADS checks its ABN and business details before an admin approves it. They can ask you about your request, and one can take it on and contact you. You are never obliged to go ahead.

There is no credit check to post, because ADS.finance does not access your credit file. Requests are for property, commercial and business finance from $100,000. Each lender and broker sets its own rates, fees and lending criteria and is responsible for its own licences and disclosures.

What to put in your loan request

1. The loan type and amount.
2. The security: property type, location, your estimate of its value and any existing debt on it.
3. What the money is for, in a sentence or two.
4. How soon you need the money, and any settlement date.
5. Your exit: how and when the loan will be repaid.
6. Your situation: self-employed, a bank decline, credit history and anything else a lender should hear early.

If you are a private lender or investor who wants to lend, you can join ADS.finance as a Finance Provider.