What is private funding or private lending?
Private funding (also called private lending or caveat lending) is short-term finance provided by private investors or non-bank lenders, secured against property. Unlike traditional bank loans, approval is based primarily on the equity in your property rather than your income or credit history. It's designed for emergency or short-term use, typically 1 to 12 months.
How fast can I get private funding?
Private funding can often settle within 24 to 48 hours for urgent situations. This is significantly faster than traditional bank loans, which typically take 2 to 6 weeks. The speed depends on the complexity of the security, the lender, and how quickly documentation can be provided.
What interest rates do private lenders charge?
Private lending interest rates typically range from 8% to 24% per annum, depending on the Loan-to-Value Ratio (LVR), property type, location, urgency, and the borrower's circumstances. These rates are significantly higher than conventional bank rates, which is why private funding should only be used for genuine short-term emergencies.
What security do I need for private funding?
Private lenders require real property as security — typically residential or commercial real estate. The loan is assessed primarily on the equity available in the property. Most private lenders will lend up to 65–75% of the property's value, though this varies. The security can be a first mortgage or a second mortgage behind an existing loan.
What is a caveat loan?
A caveat loan is a type of short-term private loan where the lender places a caveat (a legal notice of interest) on your property title instead of registering a full mortgage. Caveat loans can settle extremely quickly — sometimes within 24 hours — because the registration process is simpler. However, they often carry higher interest rates and shorter terms than registered mortgage private loans.
Can I get private funding with bad credit?
Yes. Private lenders focus primarily on the equity in your property rather than your credit score. Defaults, judgments, Part IX agreements, and even bankruptcy may not prevent approval if you have sufficient property equity and a clear exit strategy. This is one of the key reasons people turn to private funding.
What is an exit strategy and why is it important?
An exit strategy is your plan to repay or refinance the private loan before or at the end of its term. Common exit strategies include selling the property, refinancing to a conventional lender once your circumstances improve, or repaying from settlement proceeds. A clear exit strategy is critical because private loans are expensive — staying in one longer than necessary can cost tens of thousands of dollars.
How much can I borrow with private funding?
Private lenders typically lend from $50,000 to $5,000,000 or more, depending on the property equity available. Most lenders will fund up to 65–75% of the property value (LVR). The amount you can borrow depends on the property type, location, existing encumbrances, and the specific lender's criteria.
Is private lending regulated in Australia?
Yes. Private lending in Australia is regulated under the National Consumer Credit Protection Act 2009 for consumer lending. Lenders and brokers must hold an Australian Credit Licence (ACL) or be authorised representatives of a licence holder. Finance Hub holds Australian Credit Licence 573164, ensuring you receive proper disclosure, fair terms, and protection under consumer credit laws.
Should I use a broker for private funding?
Absolutely. The private lending market includes a wide range of lenders with varying terms, rates, and reputations. A licensed broker can compare options, negotiate better terms, ensure proper disclosure, and protect you from predatory lenders. Critically, a broker also helps you build an exit strategy to move into cheaper conventional lending as quickly as possible.
