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Tips for Securing Private & Non-Bank Loans in Australia
- Innovate Funding
- Sep 8, 2023
- 4 min read
Updated: 24 minutes ago
Private and non-bank loans have become an essential financing tool in Australia for property investors, developers, buyer’s agents, and business owners who need speed, flexibility, or funding structures that traditional banks often cannot provide.
However, while private lending can unlock opportunities, it is not always straightforward. Successful outcomes depend on preparation, clarity, and a clear understanding of what private and non-bank lenders actually assess.
This guide provides practical tips for securing private and non-bank loans in Australia, helping you improve approval speed, structure funding correctly, and avoid common pitfalls. If you’re new to this type of finance, start with our overview of private lending in Australia.
How Private & Non-Bank Lending Works in Australia
Unlike major banks, private and non-bank lenders focus less on traditional serviceability metrics and more on asset quality and exit strategy.
Private lenders typically assess:
The type, location, and marketability of the property
The loan-to-value ratio (LVR)
The purpose of the loan (business or investment)
The borrower’s exit strategy
Transaction timing and complexity
This asset-based approach allows private lenders to approve deals that fall outside bank policy, particularly where speed or flexibility is required.
1. Understand What Private & Non-Bank Lenders Really Look At
When preparing for a private or non-bank loan, focus on the factors lenders prioritise most:
Asset quality and location
Current LVR and existing debt
Clear exit strategy (sale, refinance, stabilisation)
Purchase or settlement timeframe
Private lenders are far less concerned with PAYG income or credit scoring than banks, provided the security and exit are strong.
To understand common structures, see:
2. Prepare Your Documents Before Approaching Lenders
Incomplete documentation is one of the most common causes of delays.
Before approaching a lender, prepare:
Contract of sale or heads of agreement
Identification and entity structure details
Recent valuation or council rates notice
Current mortgage statements and encumbrances
Evidence supporting your exit strategy
When documentation is complete, private lenders can often issue indicative terms within 24–48 hours.
3. Be Clear About Your Exit Strategy
Your exit strategy is one of the most important elements of any private loan.
Common exit strategies include:
Refinancing to a traditional bank once the asset is stabilised
Sale of the property
Completion of development or subdivision
Improved cash flow or business performance
A clearly defined exit strategy demonstrates that the loan is temporary and achievable, reducing perceived risk for the lender.
This is especially critical for auction purchases and short settlements, where timing is tight.
4. Use Valuations That Reflect Market Conditions
Private lenders place significant emphasis on the real-world marketability of a property. Best practice includes:
Using valuations based on recent local sales
Seeking second opinions for mixed-use or unusual assets
Ensuring the valuer understands the local market dynamics
Accurate valuations can improve confidence and help maximise the LVR a lender is willing to support.
5. Expect Flexible Structures, Not One-Size-Fits-All Loans
Private lending structures vary based on:
Asset type (residential, commercial, mixed-use)
Loan purpose (purchase, refinance, bridging, development)
Exit strategy and timeframe
Common private lending structures include:
Interest-only facilities
Capitalised interest
Second mortgages
Mixed-security loans
Understanding these options allows borrowers to choose the most suitable structure.
For further reading, see:
6. Communicate the Strategy, Not Just the Numbers
Private lenders assess the story behind the deal, not just the figures.
Effective applications clearly explain:
Why the loan is required
How the funds will be used
How and when the loan will be repaid
Key risks and how they are mitigated
Clear communication significantly increases lender confidence and approval speed.
7. Set Realistic Expectations on Cost and Terms
Private and non-bank loans are priced based on risk, speed, and flexibility.
Borrowers should expect:
Higher interest rates than traditional banks
Short to medium terms (typically 3–24 months)
Establishment, valuation, and legal costs
However, the value of private lending lies in:
Speed of execution
Structural flexibility
The ability to transact when banks cannot
8. Understand the Regulatory Landscape
Many private and non-bank loans in Australia are NCCP-exempt, particularly where the loan is for business or investment purposes.
This means:
Consumer credit protections may not apply
Business purpose must be clearly documented
Independent legal and financial advice is recommended for complex structures
Frequently Asked Questions: Private Non-Bank Loans Australia
What documents do private lenders require?
Typically identification, contract of sale, valuation, mortgage statements, and exit strategy documentation.
How fast can private lending be approved?
Indicative terms are often issued within 24–48 hours once the file is complete.
Can private loans be used for auctions?
Yes. Private lending is commonly used for auction purchases and short settlement scenarios.
Are private lenders more expensive than banks?
Rates may be higher, but private lending provides speed, certainty, and flexibility that banks often cannot.
Conclusion: Prepare First, Act Fast
Private and non-bank loans play an important role in the Australian lending landscape, particularly for borrowers who need fast, flexible, or non-standard funding solutions.
By understanding how private lenders assess risk, preparing documentation early, and presenting a clear exit strategy, borrowers significantly improve their chances of securing funding quickly and successfully. For further guidance, explore private lending in Australia or learn more about bridging finance.
