Can I get a private loan if I’m behind on payments?

Yes — in many situations, you can still get a private loan even if you are behind on payments with your current lender. Unlike banks, which typically decline applications where the borrower is in arrears or has missed repayments, private lenders assess the equity in your property, your loan purpose, and the exit strategy rather than focusing solely on credit history or arrears.

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Private lending is one of the most accessible options for borrowers who have:

• fallen behind on their home loan

• missed repayments

• received arrears notices

• faced defaults or judgments

• ATO debts or other outstanding liabilities

• been declined for refinance by a bank

To explore structured solutions, visit: Private Lending Australia.

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Why Private Lenders Can Help Borrowers Behind on Payments

Private lenders operate differently from banks. They rely on a commercial assessment, not strict policy rules. Here’s what private lenders prioritise:

1. Equity in the Property

Even if you are behind on repayments, strong equity (usually 20–40%) can make a private loan viable.

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2. Business or Investment Purpose

Private loans must be for non-consumer use, such as:

• business cashflow

• paying ATO debts

• refinancing investment loans

• clearing arrears to avoid default

• funding renovations or development

If the arrears relate to investment or business activity, a private loan can often fix the issue quickly.

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3. Reason for the Arrears

Private lenders understand that life events happen:

• cashflow downturn

• delayed invoices

• client non-payment

• temporary business challenges

• unexpected expenses

Private lenders are flexible, they can approve loans that traditional institutions decline.

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4. Clear Exit Strategy

Borrowers must show how the loan will be repaid, usually through:

• sale of property

• refinance once financials improve

• business income stabilising

• settlement of another property

• development completion

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Common Scenarios Where Borrowers in Arrears Use Private Lending

1. Behind on Mortgage Payments

A borrower has missed several repayments on their home or investment loan. Their bank has started collection action. A private lender can step in by providing a first mortgage refinance or a second mortgage (if equity allows):

• First Mortgage Loans

• Second Mortgage Loans

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2. Behind on Commercial Loan Payments

A business loan or overdraft is falling into arrears.
Private lenders can refinance the debt into a structured short-term facility, often with capitalised interest.

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3. Behind on ATO or Tax Debt

Banks generally do not refinance ATO arrears. Private lenders do. Visit: Short Term Business Loans

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4. Behind on Payments Due to Construction Delays

Developers may fall behind on interest payments or supplier invoices during a build.
Private lenders can provide:

• construction funding

• equity release

• rescue finance

• Construction Loans

• Development Loans

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5. Urgent Rescue Situations

A caveat loan or short-term private loan can assist borrowers who need fast funds to:

• stop collections

• clear arrears

• finalise settlement

• stabilise cashflow

• Caveat Loan.

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Why Banks Usually Say No — But Private Lenders Say Yes

Banks are governed by:

• credit scoring

• arrears policies

• serviceability models

• consumer lending compliance

• strict documentation requirements

If arrears appear, the bank often declines immediately. Private lenders, by comparison:

• do not require tax returns

• do not rely on credit scores

• accept imperfect histories

• make decisions based on equity and exit strategy

• can settle in days rather than weeks or months

This is why private lending is often the only path forward for borrowers behind on payments.

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How a Private Loan Helps a Borrower Behind on Payments 

A borrower in NSW fell three months behind on their investment loan. The bank declined a refinance request due to arrears and inconsistent income.

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A private lender provided a 12-month first mortgage refinance, capitalised the interest, cleared the arrears and prevented default. Once financials improved, the borrower refinanced back to a major bank.

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Risks and Considerations

Borrowers must understand:

• Private loans have higher pricing than traditional banks

• Loans are short-term (typically 3–24 months)

• An exit strategy is mandatory

• Valuations and fees apply

• Peak debt may include capitalised interest

When used correctly, private loans act as a bridge back to stability or long-term bank finance.

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Quick Summary: Can You Get a Private Loan If You’re Behind on Payments?

Yes, if there is equity and a clear exit strategy, private lenders can often approve loans even when banks say no.

Private loans may help you:

• clear arrears

• prevent default

• refinance investment or business loans

• pay urgent liabilities

• recover from temporary cashflow issues

Borrowers in arrears frequently use private lending as a strategic reset, allowing them to regain control of their finances.

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FAQs: Private Loans for Borrowers Behind on Payments

Can I get a private loan if I have missed repayments?

Yes. Private lenders focus on equity and exit strategy, not your repayment history.

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Will arrears automatically disqualify me?

No. Many private borrowers are in arrears when they apply.

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Do private lenders check credit reports?

They may check, but arrears alone typically do not stop approval.

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Can a private loan clear arrears?

Yes. Funds can be used to pay overdue mortgage payments, ATO debt or other liabilities.

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How fast can a private loan settle?

Many private loans settle within 3–7 business days, or faster for caveat-backed solutions.