Is my property at risk if I take a non-bank secured loan?

Yes — the same way it's at risk with a bank mortgage. A secured loan means the lender can sell the property to recover their funds if you default. The difference is transparency: private lenders are explicit about this from the outset, and the short-term nature of the loan means you have a defined exit timeline. Responsible borrowing — only taking what you can realistically repay through the planned exit — protects your position.

What's the difference between a first mortgage and a second mortgage with a private lender?

A first mortgage is registered first on the title and has priority. A second mortgage sits behind the first (usually a bank loan) and has secondary priority. If the property is sold under default, the first mortgage is repaid before the second. Because of this higher risk, second mortgages carry higher interest rates than first mortgages. However, they allow you to access equity without disturbing your existing bank facility.

Can I use property in another state as security?

Yes. Private lenders operate nationally and accept property in any Australian state or territory. Each state has its own land titles system and registration process, but your broker and the lender's solicitor handle the interstate logistics.

What happens when the loan term ends?

You repay the loan through your agreed exit strategy — selling property, refinancing to a bank, or repaying from business revenue. The lender then discharges their mortgage or withdraws their caveat from the title. If you can't repay at maturity, you may be able to negotiate an extension or refinance with another lender, but this should be a contingency plan, not the primary exit.

What Is a Non-Bank Loan Secured on Property?

May 17, 2024
1 min read

Updated: 2 hours ago

A non-bank loan secured on property is a loan issued by a private lender (not a bank) where real estate is used as collateral. If the borrower repays the loan, the lender returns the property title. If the borrower defaults, the lender can sell the property to recover their money.

What Is a Non-Bank Loan Secured on Property?

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