Private Mortgages: A Guide

Private mortgages are specially tailored loan contracts that are often targeted at borrowers that in need of a solution which could not be solved via normal banking measures.

They are not subject to the same lending restrictions as traditional mortgage companies, allowing their lenders to be far more lenient.

You will discover how to obtain one of these mortgages, how they operate, and the benefits of seeing a specialist before submitting an application in this guide to private mortgage financing.

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apartment block building funded through private mortgages

How does financing for private mortgages work? What exactly is it?

Private mortgages are a specialised type of credit that is available to clients with a need to find an immediate solution due to a number of factors including being declined via normal banking channels or 2^nd tier lenders.

Private lenders are not limited by the same regulations as banks, therefore this type of loan may be far more variable than a standard mortgage deal.

Since they may provide customised mortgages on an individual basis, consumers frequently have access to offers that aren’t available anywhere else, such as larger income multiples and unrestricted loan amounts.

You could find it difficult to get these services without the aid of a specialised advisor, simply because many of the creditors who provide private loans only work via mortgage brokers.

Fast turnaround

Up to 75% LVR

Rates starting at 6.99% pa

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Why opt for this type of private mortgage finance?

Private mortgage financing is a customised service, and the lenders that provide it take great satisfaction in providing more discretion and secrecy.

Although many borrowers may find this appealing, there are other factors that influence people’s decisions as well:

Generally an asset based product that relies on a good strategy to exit the loan

Providing access to a lot more funding than one could seek through normal banking channels.

Securing a loan against existing property

Securing a mortgage that is faster and less paperwork than they could with a traditional lender

Gaining access to private lending

To get started, you need to:

Compile your documents. You’ll need to provide evidence of your scenario and requirements, as well as an assets and liabilities declaration. Additionally, you’ll need the standard documents needed to apply for a mortgage, including identification, residence, and money deposits proofs.

Speak with a mortgage broker. Since the majority of private lenders only work through intermediaries, this step is typically a requirement if you require access to them. We collaborate with brokers who focus in private financing, and they have the expertise, skills, and connections to support you in finding the best lender. If you contact us with a question, we’ll provide you a free introduction to one of these experts.

Allow your broker to handle this part! After you’ve been paired with one, they’ll connect you to possible private lenders. One of the major advantages of utilising a broker for such a loan is that they can arrange a custom arrangement on your behalf and ensure that you receive the best rates and conditions conceivable from there.

Getting a second mortgage

Like private financing, second mortgages are frequently handled more tightly than first mortgages. Higher interest rates, lower loan-to-value (LTV) ratios, and more stringent financial stress tests could result from this. Your specific fees and terms will be determined on a case-by-case basis.

Private loans for investment properties

Mortgages for investment properties are a possibility and are appraised similarly to conventional mortgages for investment properties. These mortgages are given on a customised basis, much like private residential mortgages, but the sort of agreement you’ll be offered will depend on the soundness of the investment and the projected rental revenue.

The amount of rental income you will require is not governed by rigors guidelines, especially if you are securing the mortgage with assets.
However, unless secured against a particularly liquid asset like cash, deposit requirements may be greater than for private home loans, which normally have a loan-to-value ratio of 90%.

Business mortgages

A business mortgage can also be obtained from a private lender. Due to the sometimes “bespoke” character of commercial financing agreements, private lenders really account for an abnormally significant percentage of the commercial mortgage market.

The funding of some of the bigger commercial mortgages is frequently provided by specialised private lenders; your ordinary bank or credit union has far less stomach for that type of risk.

What happens if you have poor credit?

It’s not a deal-breaker as it may be with a conventional mortgage. Since private lenders are often more concerned with the collateral assets and the overall soundness of the application, lending standards for private mortgages are less strict than they are on the high street. They are able to give financing to clients with all varieties of bad credit, and they will only be worried if your adverse immediately jeopardises the agreement.

Having said that, if you have really terrible credit, the lender would probably ask you about the reasons why. In some circumstances, it can affect the kind of deal you are eligible for. For more on this, please view our article on private loans vs bank loans which may help you determine which option is best for you.

Connect with one of our private mortgage experts today

Without the assistance of a specialised broker, it’s possible that you may have difficulty finding a private mortgage.

Although many of the lenders in this market only work through intermediaries, you can get the help you need right now.

We partner with brokers who focus on private mortgages and high net worth loans because they have the specialised knowledge, experience, and lender connections you need to achieve the finest customised offer.

Contact us and we’ll arrange a free, no-obligation meeting so we can best assist you in obtaining the financing you require right now.

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our private mortgages offerings.

Are you looking for non-bank funding through a private lender?

Discussing the benefits of private mortgages against bank mortgages

$500K - $10M+ for private mortgages

Via our large panel of private lenders and investors we can source private mortgage funding when the banks won’t, even in excess of $10 million. We can have funding in your account within 24-48 hours upon approval.

Capitalised loan facilities

We pride ourselves on sourcing the cheapest rates in the market. Guaranteed. Lending is determined based on your current financial situation, or your business’ assets & turnover.

80-90% LVR & 2-24 month loans

When you secure your property against your loan, you can borrow up to 80% of it’s value. Although standard loan lengths are 2 -12 months, often our lenders can extend this to suit your needs.

1 mortgage to equity/JV structure - deal dependent

We can find lending options that others didn’t know existed, that are bespoke and perfectly suited to your needs. So no matter the scenario – we have your back.

you’re in good company with our happy private finance clients.

CASE STUDY: Recently funded deal

Loan Amount: $1,700,000
Where: Bendigo
Security Type: Mix of Commercial/Land/House
Valuation: $2,360,000
Purpose: Refinance from high interest lender
LVR: 72%
Term: 6 months

Woman reviews her private mortgages offering

apply for a private mortgage today.

tell us who you are.

Fill out an enquiry form or use our live-chat to start the conversation

we process your loan.

We understand that every situation is unique and that yours is no different. That’s why our tailored loan solutions are unique to each of our customers.

you receive funding.

Tell us which bank account you would like the funds sent to. In most cases we are able to source you funding within 48 hours upon approval.

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Frequently Asked Questions

What is a private mortgage?

A private mortgage is usually a short term loan taken out from a private lender. This type of mortgage is different from other mortgages since it does not involve any banks or traditional lenders. It generally involves two parties, the private lender and the borrower, and is most often used for people when they are in need of money quickly or do not have access to more traditional forms of financing. Private mortgages also offer higher interest rates than typical loan options, though it may be worth exploring this option if the borrower cannot get approved from bank or other institutional lenders.
What are the benefits of a private mortgage?

Private mortgages can benefit homeowners looking for solutions that are faster, more private, and easier to obtain than traditional mortgage options. Private lenders provide private mortgages with fewer requirements, shorter terms and higher interest rates than conventional mortgages. They offer a unique way for would-be homeowners or those who want to refinance existing mortgages to buy real estate with private funds. Private mortgages are ideal for borrowers unable to qualify for a traditional bank loan due to credit issues, lack of employment history or other issues.

Although private mortgage rates tend to be higher than traditional bank loans, the amount the borrower pays is typically lower due to the shorter terms offered. This type of loan also offers more flexibility in repayment plans and closing costs. If you’re searching for an alternative form of financing on your next property purchase or refinancing a home, it’s worth considering private mortgaging as a viable option.
How do private mortgages work in Australia?

In Australia, private mortgages work in much the same way as standard bank loans but with a few differences. Unlike a traditional home loan, private mortgages are typically funded by private lenders such as family members, private investors or other non-traditional financial institutions. The borrower can then negotiate with the private lender to establish interest rates, payment terms and loan amounts. In addition, private mortgages often offer flexibility and convenience that traditional bank loans may not provide because private lenders are generally more understanding of individual circumstances. Although private mortgage products usually come with higher interest rates than standard bank loans, they can be a great option for those who need additional financing outside of banks and other traditional lending sources.
Who can apply for a private mortgage?

Those looking to purchase a home through private financing have several options they can explore. Qualifying for private mortgage is primarily based on an individual or firm’s financial records, credit score, and capacity to fulfill their obligations as a borrower. It is important to understand that private mortgages often require larger down payments and come with higher interest rates than traditional loans offered by banks or other lenders. While private mortgages may be difficult to secure, they are still available for those who demonstrate that the investment is a sound one and the commitment to repay it is reliable.
How do I find the best private mortgage rates in Australia?

When looking for private mortgages in Australia, it is important to compare your options. Shopping around and researching the available private mortgage rates can help you find the best solution for your specific financial needs. It is possible to find private lenders that offer competitive interest rates as well as flexible repayment options. By doing some research and understanding the private mortgage market, you will be able to make an informed decision on the best private mortgage rates in Australia that are suitable for your particular situation.
How do I compare private mortgage lenders in Australia?

If you’re looking to compare private mortgage lenders in Australia, it’s essential to do your research. Start by comparing their interest rates and fees, as well as their products on offer. It’s also important to consider the private lender’s service levels, understanding of the local market, level of experience and customer satisfaction record. Once you have carefully researched and compared private mortgage lenders in Australia, you can then make an informed decision that best suits your needs.
What are the eligibility criteria for a private mortgage?

Obtaining a private mortgage can offer a range of benefits, from more flexible repayment terms to competitive interest rates. However, private lenders often have stricter eligibility criteria compared to traditional mortgages. To qualify for a private mortgage, borrowers need to demonstrate a viable repayment strategy based on steady income and an acceptable credit score. Additional requirements may include proof of employment, proof of liquid assets, and property appraisal results. Even with the added requirements, private mortgages are becoming increasingly popular due to the advantages they provide over other lenders.
How much can I borrow with a private mortgage?

When seeking a private mortgage, it is important to note that the maximum amount you can borrow may depend on certain factors. Factors such as your credit score, monthly income, and total loan-to-value ratio of the property all play a role in determining how much of a private mortgage you can take out. Ultimately, private mortgages are generally more flexible than traditional methods in terms of borrowing amounts and may provide borrowers with more favorable loan amounts depending on their individual financial circumstances.
How long can I finance a property with a private mortgage?

Financing a property with a private mortgage varies in term length depending on the agreement between the lender and borrower. This can range anywhere from six months to seven years, though most private mortgage agreements are usually done within two years. Private mortgages typically have shorter terms and higher interest rates than traditional mortgages, but they are an advantageous option for those who need access to short-term financing with minimal qualifications or loan restrictions. Ultimately, private mortgages provide reliable access to financial capital to carry out private real estate transactions efficiently.
What are the repayment options for a private mortgage?

When considering private mortgages, there are many important aspects to take into account, especially when it comes to repayment options. Generally speaking, private mortgage financing should be treated very differently than traditional options because of the higher risk involved. These agreements usually require larger down payments and have much stricter repayment requirements spanning over a shorter period of time. In most cases, private mortgages are structured using an interest-only payment format where principal and interest payments begin later in the term of the loan. Alternatively, it is possible to configure private loans with lump-sum payments or balloon payments, depending on the property and financial circumstances. When making big decisions about private mortgages, always consult a finance professional for more information about what works best for your specific situation.
What are the tax implications of a private mortgage?

Understanding the tax implications of private mortgages is fundamental for anyone considering this form of financing. Private mortgages are not regulated or insured like traditional mortgages, so it’s important to consider factors such as interest rate deductions and private mortgage insurance before making a decision. A private mortgage may be fully or partially deductible depending on the borrower’s individual circumstances, however other costs associated with private mortgages may not be eligible for any deductions whatsoever. It’s essential to discuss private mortgage tax issues with a certified tax professional in order to ensure that the strategy you choose is compatible with your unique financial situation.
What are the fees associated with a private mortgage?

Taking out a private mortgage usually requires additional fees and costs apart from the interest rate that is being charged. These fees can range from private mortgage insurance (PMI) to origination fees, closing costs, appraisal fees, underwriting fees and more. Since private mortgages are not backed by federal or state agencies, borrowers must be aware of the differences between private and government-backed loans in regards to borrowing conditions and expenditures. Some private lenders may even require that people wishing to take out a private mortgage have higher credit scores than for a traditional loan. Knowing all associated private mortgage costs before taking out this type of loan is essential for any borrower considering this option.
What are the risks of a private mortgage?

Private mortgages are an alternative to the traditional private mortgage lenders like banks, however, they can carry certain risks. These private mortgages often have higher interest rates than private lending institutions and it is less likely that a private lender will offer an economic grace period or loan restructuring options if the borrower has difficulty making payments. Additionally, private financing often comes with shorter terms than what traditional private lenders offer, and there may be additional fees including private mortgage insurance costs. It is important to do your research into any private mortgage before committing to it in order to fully understand all of its terms and conditions as well as its possible risks.
How do I choose the right private mortgage for me?

Choosing the right private mortgage is a big decision and one that should not be taken lightly. The key to finding the best private mortgage for you is research. There are many private mortgages available, so it is important to weigh up the pros and cons of each offer before committing. Finding out about the private lender’s reputation, fees charged, repayment terms and other relevant details will help you make an informed decision about which private mortgage best suits your needs. Lastly, it may be wise to consult a professional for advice in order to ensure your decision will be beneficial in the long run.
What should I consider before applying for a private mortgage?

Before applying for a private mortgage, it’s important to consider all of the factors involved. You should inquire as to what kind of private mortgage is best suited to your financial situation and credit score. Make sure you understand what the interest rate and other fees will be before signing on the dotted line. In addition, it’s important to find out how long the private mortgage will last and how much money will be due at the end of it. Finally, research potential lenders and compare their terms carefully before making a decision. By taking the time to look into these details, you can ensure that you make an informed decision when selecting a private mortgage.
How do I apply for a private mortgage in Australia?

Applying for a private mortgage in Australia is not as difficult as it seems! The process can be broken down into easy-to-follow steps to make the experience manageable and stress-free. First, you must contact private lenders or brokers who specialise and offer private mortgages. Once you have gained their assistance, you will need to fill out an application form that requests information about your finances and employment. Additionally, private lenders will assess whether you are eligible for private loans by examining factors such as credit history, the value of property you want to borrow against and other financial obligations. After this assessment is complete, private lenders may provide a private loan if everything checks out. Applying for private mortgages in Australia does take some effort but can be streamlined with the help of professionals — so don’t be afraid to seek professional guidance!
What is the interest rate for private mortgages?
What if I have a bad credit rating?
Are there ongoing payments?
How quickly are the funds advanced?
Will I need a valuation?
Am I eligible for a loan?
For Palm Capital to source you a loan you must have either:

Own property

An ABN or ACN

Have been in business for a minimum of 6 months

Turnover at least $5,000 per month.
How much does a Palm Capital loan cost?

Every loan we source is different and has variable rates, but with Palm Capital, there are no hidden fees or costs. Our policy is to be completely transparent with our clients at all times – you will always be informed of any interest or management fees. Our rates start as low as 0.83% p/m.
How quickly will I receive funding?