Private Lending in Melbourne: How It Works, When to Use It & What Local Borrowers Should Know

Private lending in Melbourne has become a practical solution for borrowers who need speed, flexibility, or funding structures that don’t fit bank policy. In a market where auctions, short settlements, and value-add strategies are common, private lenders can provide asset-backed finance for investors, developers, and business owners when timing matters. If you’re comparing options, start with our Melbourne overview page: private lending in Melbourne. This guide explains:

• What private lending is (and what it isn’t)

• Common Melbourne use cases (auctions, bridging, equity release, development)

• Typical structures like first and second mortgages

• What private lenders look for

• Risks and best practices before you proceed

What Is Private Lending (and Why Melbourne Borrowers Use It)?

Private lending is non-bank, asset-backed finance, usually secured against property. Unlike traditional banks that focus heavily on serviceability and policy, private lenders typically assess:

• the security asset (value and marketability)

• LVR (loan-to-value ratio)

• the exit strategy (sale, refinance, stabilisation)

• transaction timeframes

This makes private lending useful when a deal is time-sensitive, complex, or outside standard bank settings. For a broader overview, see: What is private lending and how does it work?

Common Reasons People Use Private Lending in Melbourne

Melbourne deals often require speed and certainty. Private lending is commonly used for:

1) Auction Purchases and Short Settlements:

When a borrower needs funding within days (not weeks), private lending can support purchases where bank approvals can’t meet the timeframe.

2) Bridging Between Sale and Purchase

Bridging loans help borrowers buy first and sell later, or bridge to refinance. Learn more about bridging loans.

3) Equity Release Without Refinancing the First Mortgage

If a borrower has equity but the bank won’t extend lending, a second mortgage can unlock capital without disturbing the senior facility. See second mortgage lending.

4) Development and Subdivision Funding

Private lending is commonly used to fund early works, approvals, or short-term capital requirements. Explore development loans.

5) Business-Purpose Funding Secured Against Property

Businesses often use property-backed lending to access working capital, acquisitions, or restructure debts. See secured business loans.

What Types of Private Loans Are Common in Melbourne?

First Mortgage Private Lending

A first mortgage is the primary security position and is commonly used for purchases or refinances where timing and certainty are critical. Learn more about first mortgage private lending.

Second Mortgages

Second mortgages are useful when the borrower wants additional funds without refinancing the first mortgage (often faster and can be more practical). Learn more about second mortgage finance.

Short-Term Lending

Private lending is typically short term and exit-driven, often used to bridge a period before a refinance or sale. If you’re comparing options, see short-term business loans.

Caveat Loans (Urgent Scenarios)

In urgent situations with minimal documentation time, some borrowers consider caveat lending structures. See caveat loans.

What Private Lenders Look For

Private lenders want clarity on the fundamentals:

• Security quality: location, property type, marketability

• LVR and equity position: current debt + requested funds

• Purpose: business or investment use

• Exit strategy: refinance, sale, stabilisation, completion of works

• Timeframe: settlement date, urgency, milestones

A strong private lending deal is usually one with a clear exit, reasonable LVR, and a solid asset.

Typical Rates, LVRs & Timeframes (General Guidance)

Terms vary based on asset type, LVR, and scenario, but common structures include:

• First mortgages commonly up to ~65% LVR on many scenarios

• Second mortgages often structured to around ~75% combined LVR on quality assets (case-by-case)

• Indicative terms can often be issued quickly once the security and scenario are clear

For Melbourne-specific lending parameters and product summary, refer to: private lending in Melbourne.

Private lending isn’t “cheap money” it’s execution finance. It’s used to move quickly, manage complexity, and control outcomes.

Practical Melbourne Examples Where Private Lending Helps

Private lending is often used for:

• Renovation or value-add strategy followed by refinance

• Short-term bridging during sale campaigns

• Equity release to secure deposits or fund opportunities

• Development and staged funding where bank conditions are restrictive

If your scenario is more state-wide, you can also view private lending in Victoria.

FAQs: Private Lending Melbourne

Is private lending legal in Melbourne?

Yes. Private lending is legal in Australia when structured correctly and documented appropriately (particularly for business or investment purposes).

How fast can private lending settle?

Timing depends on valuation and legal process, but private lending is often chosen because it can settle far faster than traditional banks when the file is complete.

Can I get a second mortgage if my bank won’t help?

Often yes — that’s one of the most common reasons borrowers use second mortgage lending.

Is private lending only for developers?

No. It’s used by investors and business owners as well, especially where timing and flexibility matter.

Final Thoughts

Private lending in Melbourne can be a powerful tool when you need speed, flexibility, or a solution that isn’t constrained by bank policy. The key to using it well is having a clear exit strategy, appropriate leverage, and a strong security asset. If you want a summary of Melbourne lending options, start here: private lending in Melbourne. to protect borrowers.