What Are the Interest Rates for Private Loans by Private Lenders in Australia? (2026 Update)

This is the most comprehensive guide to private lending interest rates in Australia, updated for April 2026. It covers every major product category — first mortgages, second mortgages, caveat loans, bridging loans, construction finance, and development loans — with current rate ranges, fee structures, and the factors that determine where your rate sits within each range.

Whether you're comparing options for the first time or checking current market rates before refinancing, this guide gives you the data you need to make an informed decision.

Last updated: April 2026. Rates are reviewed quarterly. All rates are indicative and vary by lender, LVR, property type, and borrower profile.

First Mortgage Rates (Private Lender)

A private first mortgage is the lowest-cost private lending product because the lender has first priority over the security property.

Scenario	Interest Rate (p.a.)	Typical LVR	Term
Low risk (metro residential, LVR under 50%)	8.75%–9.5%	Up to 50%	3–12 months
Standard (metro residential, LVR 50%–65%)	9.5%–11%	50%–65%	3–12 months
Higher risk (regional, commercial, or LVR 65%–75%)	11%–14%	65%–75%	3–12 months
Bad credit (default/judgement, metro security)	10%–14%	Up to 65%	3–12 months
No doc (minimal financial documentation)	9.5%–14%	Up to 65%–70%	3–12 months

Fees: Establishment 1%–3%, legal $2,000–$4,000, valuation $500–$2,000.

What's changed since 2025: First mortgage rates have remained stable, with the floor holding at approximately 8.75% p.a. for best-case scenarios. Increased lender competition in the sub-65% LVR segment has kept rates at the lower end of historical ranges. The upper end has not moved materially.

Second Mortgage Rates

Second mortgages carry higher rates than first mortgages because the lender sits behind the existing first mortgagee and only recovers after the first mortgage is fully repaid.

Scenario	Interest Rate (p.m.)	Equivalent p.a.	Typical Combined LVR	Term
Low risk (metro residential, combined LVR under 60%)	0.89%–1.1%	10.68%–13.2%	Up to 60%	3–24 months
Standard (metro residential, combined LVR 60%–70%)	1.1%–1.5%	13.2%–18%	60%–70%	3–24 months
Higher risk (regional/commercial, LVR 65%–75%)	1.5%–1.75%	18%–21%	65%–75%	3–18 months
Bad credit	1.3%–2.0%	15.6%–24%	Up to 65%	3–24 months
No doc	1.2%–2.0%	14.4%–24%	Up to 65%–70%	3–24 months

Fees: Establishment 2%–4%, legal $2,500–$5,000, first mortgagee consent fee (varies by bank, typically $200–$500), valuation $500–$2,000.

What's changed since 2025: The competitive end of the second mortgage market has pushed rates down slightly — the floor has moved from approximately 0.95% p.m. to 0.89% p.m. for best-case metropolitan residential security. Mid-range rates remain stable.

Caveat Loan Rates

Caveat loans are the fastest form of private secured lending, settling in 24–72 hours. The higher rates reflect the speed, convenience, and the weaker security position (a caveat versus a registered mortgage).

Scenario	Interest Rate (p.m.)	Equivalent p.a.	Typical LVR	Term
Standard (metro residential)	1.5%–2.5%	18%–30%	Up to 65%	1–6 months
Higher risk (regional, commercial)	2.5%–3.5%	30%–42%	Up to 55%	1–6 months
Bad credit	2.0%–3.5%	24%–42%	Up to 55%–60%	1–3 months

Fees: Establishment 2%–5%, legal $1,500–$3,500.

What's changed since 2025: Caveat loan rates have compressed slightly at the lower end as more lenders have entered the market. The floor has moved from 1.75% to approximately 1.5% p.m. for strong metro security. Upper-end rates for higher-risk scenarios remain unchanged.

Bridging Loan Rates

Bridging loans fund the gap between buying a new property and selling an existing one, or between short-term finance and a longer-term facility.

Scenario	Interest Rate (p.m.)	Equivalent p.a.	Typical LVR	Term
Residential (sale and purchase bridge)	0.89%–1.25%	10.68%–15%	Up to 80%	1–12 months
Commercial/investment bridge	1.0%–1.5%	12%–18%	Up to 70%	3–12 months
Auction/deposit bridge	1.25%–2.0%	15%–24%	Up to 75%	1–6 months

Fees: Establishment 1%–3%, legal $2,000–$5,000, valuation $500–$2,000.

What's changed since 2025: Bridging loan rates remain stable. The residential bridge segment continues to offer some of the most competitive rates in private lending due to the low risk profile (property is typically being sold with a clear exit).

Construction and Development Finance Rates

Construction finance is drawn progressively as build milestones are completed. Interest is charged only on the drawn balance.

Scenario	Interest Rate (p.a.)	Typical LVR (against end value)	Term
Residential construction (experienced developer)	9%–11%	Up to 65%–75%	12–24 months
Residential construction (first-time developer)	11%–14%	Up to 60%–65%	12–18 months
Commercial construction	10%–13%	Up to 60%–70%	12–24 months
Land subdivision	10%–14%	Up to 60%–65%	6–18 months

Fees: Establishment 1.5%–3%, legal $5,000–$15,000, QS inspection fees $500–$1,500 per stage (5–6 inspections), valuation $2,000–$5,000 (as-is and on-completion).

What's changed since 2025: Construction finance rates have tightened slightly for experienced developers with strong pre-sales, reflecting increased lender competition in the $2M–$10M facility range. First-time developer rates remain at the upper end.

Rate Comparison: Bank vs Private Lender

For context, here's how private lending rates compare to bank rates for the equivalent product categories.

Product	Bank Rate	Private Lender Rate	Why the Difference?
First mortgage	5.5%–7.5% p.a.	8.75%–14% p.a.	Speed, flexibility, reduced documentation
Second mortgage	Rarely offered by banks	0.89%–1.75% p.m.	Banks generally don't offer 2nd mortgages
Bridging loan	6%–8% p.a. (limited availability)	0.89%–1.5% p.m.	Speed, fewer conditions, higher LVR
Construction	6%–8% p.a.	9%–14% p.a.	Flexible pre-sale requirements, faster approval

The rate premium for private lending reflects shorter terms, higher flexibility, faster approval, and the ability to serve borrowers that banks decline. Over a 6–12 month term, the total dollar cost difference is often smaller than borrowers expect.

2026 Market Outlook

Several trends are shaping private lending rates through 2026:

Increased lender competition in the first mortgage and bridging segments is keeping rates at the competitive end of ranges. New entrants and expanding mortgage funds are driving this trend, particularly for deals at sub-65% LVR on metropolitan residential security.

Stable wholesale funding costs mean the base cost of capital for private lenders hasn't shifted materially. The RBA cash rate environment is reflected in the rate floor but doesn't drive day-to-day private lending pricing the way it does for bank variable rates.

Continued demand from self-employed borrowers, property developers, and business owners who can't access bank finance quickly enough is supporting transaction volume. This demand keeps lenders active and competitive.

For borrowers, the practical implication is that 2026 is a stable environment for private lending costs. The best strategy is to focus on what you can control: LVR, security quality, exit strategy documentation, and working with a broker who negotiates actively across a wide lender panel.

How to Get a Current Rate Quote

The rates in this guide are indicative ranges. Your actual rate depends on your specific circumstances — the property, the LVR, the loan purpose, and your profile.

To get a current rate indication for your situation, contact Innovate Funding. We source competitive rates across a panel of private lenders and can provide a tailored comparison within 24 hours of your enquiry.

Frequently Asked Questions

How often do private lending rates change?

Private lending rates are individually priced per deal, so they don't change on a set schedule like bank variable rates. However, the market range shifts gradually based on lender competition, wholesale funding costs, and demand. We review and update the rates in this guide quarterly.

Are private lending rates negotiable?

Yes. The rate is set based on the risk profile of each deal, and there is room to negotiate — particularly on larger loans, at lower LVRs, and for repeat borrowers with a track record of clean exits. Your broker should be negotiating on your behalf as standard practice.

Why are rates quoted monthly for some products and annually for others?

First mortgages and construction finance are typically quoted per annum (p.a.) because they follow a standard annual interest convention. Second mortgages and caveat loans are typically quoted per month (p.m.) because the loan terms are short and borrowers find it easier to understand the cost on a monthly basis. Always convert to the same basis when comparing products.

What is the lowest private lending rate available in Australia?

As of April 2026, the lowest private lending rate we're seeing is approximately 8.75% p.a. for a first mortgage on metropolitan residential property at sub-50% LVR with a strong exit strategy. This is the floor rate and is available to a limited number of applicants who meet all best-case criteria.

Will rates go down in 2026?

Private lending rates are unlikely to move significantly lower through 2026. The competitive floor of approximately 8.75% p.a. for first mortgages has held for several quarters. Marginal improvements may occur in the second mortgage segment as lender competition increases, but the overall rate environment is expected to remain stable.