What Is Private Lending?
Private lenders are non-bank credit providers — typically high-net-worth individuals, family offices, or private credit funds — who lend against property at commercial rates.
Private lending is not a last resort. For the right scenario, it’s the fastest, most flexible source of capital available in the Australian market.
Private lending is used for:
- Bridging finance when timing doesn’t allow for bank processing
- Deals declined by banks due to policy (not risk)
- Transactions where speed is commercially critical
- Construction or development scenarios where bank draw schedules don’t suit
- Non-standard security types (commercial, rural, vacant land, unique dwellings)
- Borrowers with credit events (defaults, part IXs, discharged bankruptcy)
- Situations requiring settlement in days, not months
The Private Lending Market in Australia
Australia’s private lending market has grown significantly over the past decade. Regulatory changes have made bank credit tighter — particularly for self-employed borrowers, high-LVR scenarios, and non-standard security. Private lenders have filled the gap.
Key facts:
- Australian private credit market estimated at $30B+ and growing
- Typical rates: 8–18% p.a. depending on risk, LVR, and security
- Terms: typically 3–24 months (not designed as permanent finance)
- LVR: up to 65–70% for residential; 50–60% for commercial
- Settlement: as fast as 24–72 hours in some cases
Private lending is short-term capital designed to bridge to a better position — completing a purchase before a sale settles, getting a development out of the ground, or holding a property while refinancing into bank finance.
When Private Finance Makes Sense
| Scenario | Why Private Works |
|---|---|
| Buying before selling | No bank will approve without existing property sold — private bridges the gap |
| Declined by bank (policy issue) | Policy decline ≠ bad deal — private lenders assess on security and exit, not policy |
| Construction / development | Flexible draw schedules aligned to your project timeline |
| Fast settlement (7–30 days) | Banks cannot process in this timeframe — private can |
| Non-standard security | Commercial, vacant land, rural, unique residential — private lenders assess case by case |
| Credit events | Defaults, part IXs, recent bankruptcy — private lenders focus on security and exit, not credit history |
| Self-employed | Income difficult to document to bank standards — private lenders assess on asset position |
What Private Lenders Focus On
Unlike bank lending (which focuses heavily on income and credit), private lenders focus primarily on:
1. Security
The quality, location, and marketability of the asset securing the loan. A strong residential security in a liquid market gives the lender confidence in recovery if needed.
2. Exit Strategy
How and when will the private loan be repaid? Sale of the property, refinance into bank finance, or settlement of another asset? A clear, credible exit reduces lender risk and improves deal terms.
3. Loan-to-Value Ratio
Private lenders protect themselves with conservative LVRs. Typically 60–70% for residential, 50–60% for commercial. Higher LVR means higher rate or harder deal.
The Finance Agency assesses your private lending deal on these three factors before engaging any lender. We only proceed when the deal makes sense — both for you and for the lender’s appetite.
Private Finance Costs — Honest Overview
Private lending costs more than bank finance. That’s the trade. You’re paying for speed, flexibility, and access — not rate.
| Cost Element | Typical Range |
|---|---|
| Interest rate | 8–18% p.a. (annualised) |
| Establishment fee | 1–3% of loan amount |
| Legal fees | $1,500–$4,000+ (borrower pays lender’s legal) |
| Exit fee | Some lenders charge 1–2% on exit |
| Term | 3–24 months typical |
The key question is not “what does this cost?” — it is “what is the cost of NOT doing this deal?” If a $3M commercial property settles at $2.6M because you needed 30-day finance and paid $50K in private lending costs — the net outcome may still be strongly positive.
We help you model this honestly before you commit.
Our Private Lending Process
Step 1: Deal Assessment (Free, Same Day)
We review your deal, security, and exit strategy. If it works for private finance, we identify the right lender and indicative terms within hours — not days.
Step 2: Lender Introduction and Term Sheet
We introduce your deal to lenders in our direct network. Most private deals receive a term sheet within 24–48 hours of submission.
Step 3: Legal and Settlement
Private loans are legally documented like any other loan — mortgage over security, loan agreement, disclosure documents. Settlement timelines depend on your solicitors.
The Finance Agency’s Private Lending Approach
We have direct relationships with private lenders across Australia — not through aggregator lists, but through established deal relationships built over 15 years of WA finance.
When we submit a deal to a private lender, we do it with full documentation and honest deal structuring. Private lenders work with brokers who don’t waste their time. Our reputation in the private market is the reason we get fast responses and honest feedback on deals.
We do not take on every private lending scenario. We assess first. If a deal doesn’t work — because the security is too thin, the exit is unclear, or the cost doesn’t justify the benefit — we tell you.
Our Credentials
| Credential | Detail |
|---|---|
| Experience | 15 years in WA finance |
| Volume | $500M+ settled (residential, commercial, private) |
| Private market | Direct relationships, not aggregator lists |
| Membership | MFAA (Mortgage & Finance Association of Australia) |
| Location | Perth, Western Australia |
Frequently Asked Questions
How fast can a private loan settle?
In some scenarios, as fast as 24–48 hours from term sheet to settlement. More realistic for a new deal with a new lender: 5–14 business days. Settlement speed depends on how quickly documentation can be completed by solicitors on both sides.
What security do private lenders accept?
Primarily registered first mortgages over real property. Residential is most liquid and attracts the best rates. Commercial, industrial, and rural are accepted by some lenders at higher rates or lower LVRs. Second mortgages are possible with some lenders but are more expensive.
Can I get private finance if I have a bad credit history?
Private lenders focus on security and exit — not credit history. A bankruptcy, default, or part IX arrangement does not automatically disqualify you. The deal is assessed on what you have and how you’ll repay, not what happened in the past.
Is private lending regulated?
Yes. Private lending in Australia is regulated by ASIC and the National Consumer Credit Protection Act (for consumer lending). Consumer private loans require licensing and disclosure obligations. Commercial and investor lending has different regulatory requirements. All legitimate private lenders operate under appropriate licensing frameworks.
How do private lenders differ from non-bank lenders like La Trobe or Pepper?
Non-bank lenders like La Trobe, Pepper, and Bluestone operate with standardised credit policies (though more flexible than major banks). Private lenders are typically individuals or small funds assessing each deal on its merits without standard policy criteria. Private lending is faster, more flexible, and more expensive than non-bank lenders.
What is the difference between private lending and a hard money loan?
They are essentially the same thing — “hard money” is the US term for what Australians call private or non-bank lending against hard assets (property). The principles are the same: asset-secured, short-term, priced for risk.
Related Services
→ Commercial Finance Broker Perth
Speak to a Private Finance Specialist
Private lending decisions move fast. If you have a deal that needs assessment — reach out now. We’ll review it and give you an honest assessment within hours.
The Finance Agency
Perth, Western Australia | MFAA Member