Private Mortgages: A Guide
Private mortgages are specially tailored loan contracts that are often targeted at borrowers that in need of a solution which could not be solved via normal banking measures.
They are not subject to the same lending restrictions as traditional mortgage companies, allowing their lenders to be far more lenient.
You will discover how to obtain one of these mortgages, how they operate, and the benefits of seeing a specialist before submitting an application in this guide to private mortgage financing.
How does financing for private mortgages work? What exactly is it?
Private mortgages are a specialised type of credit that is available to clients with a need to find an immediate solution due to a number of factors including being declined via normal banking channels or 2nd tier lenders.
Private lenders are not limited by the same regulations as banks, therefore this type of loan may be far more variable than a standard mortgage deal.
Since they may provide customised mortgages on an individual basis, consumers frequently have access to offers that aren’t available anywhere else, such as larger income multiples and unrestricted loan amounts.
You could find it difficult to get these services without the aid of a specialised advisor, simply because many of the creditors who provide private loans only work via mortgage brokers.
Why opt for this type of private mortgage finance?
Private mortgage financing is a customised service, and the lenders that provide it take great satisfaction in providing more discretion and secrecy.
Although many borrowers may find this appealing, there are other factors that influence people’s decisions as well:
Gaining access to private lending
To get started, you need to:
Compile your documents. You’ll need to provide evidence of your scenario and requirements, as well as an assets and liabilities declaration. Additionally, you’ll need the standard documents needed to apply for a mortgage, including identification, residence, and money deposits proofs.
Speak with a mortgage broker. Since the majority of private lenders only work through intermediaries, this step is typically a requirement if you require access to them. We collaborate with brokers who focus in private financing, and they have the expertise, skills, and connections to support you in finding the best lender. If you contact us with a question, we’ll provide you a free introduction to one of these experts.
Allow your broker to handle this part! After you’ve been paired with one, they’ll connect you to possible private lenders. One of the major advantages of utilising a broker for such a loan is that they can arrange a custom arrangement on your behalf and ensure that you receive the best rates and conditions conceivable from there.
Getting a second mortgage
Like private financing, second mortgages are frequently handled more tightly than first mortgages. Higher interest rates, lower loan-to-value (LTV) ratios, and more stringent financial stress tests could result from this. Your specific fees and terms will be determined on a case-by-case basis.
Private loans for investment properties
Mortgages for investment properties are a possibility and are appraised similarly to conventional mortgages for investment properties. These mortgages are given on a customised basis, much like private residential mortgages, but the sort of agreement you’ll be offered will depend on the soundness of the investment and the projected rental revenue.
The amount of rental income you will require is not governed by rigors guidelines, especially if you are securing the mortgage with assets.
However, unless secured against a particularly liquid asset like cash, deposit requirements may be greater than for private home loans, which normally have a loan-to-value ratio of 90%.
Business mortgages
A business mortgage can also be obtained from a private lender. Due to the sometimes “bespoke” character of commercial financing agreements, private lenders really account for an abnormally significant percentage of the commercial mortgage market.
The funding of some of the bigger commercial mortgages is frequently provided by specialised private lenders; your ordinary bank or credit union has far less stomach for that type of risk.
What happens if you have poor credit?
It’s not a deal-breaker as it may be with a conventional mortgage. Since private lenders are often more concerned with the collateral assets and the overall soundness of the application, lending standards for private mortgages are less strict than they are on the high street. They are able to give financing to clients with all varieties of bad credit, and they will only be worried if your adverse immediately jeopardises the agreement.
Having said that, if you have really terrible credit, the lender would probably ask you about the reasons why. In some circumstances, it can affect the kind of deal you are eligible for. For more on this, please view our article on private loans vs bank loans which may help you determine which option is best for you.
Connect with one of our private mortgage experts today
Without the assistance of a specialised broker, it’s possible that you may have difficulty finding a private mortgage.
Although many of the lenders in this market only work through intermediaries, you can get the help you need right now.
We partner with brokers who focus on private mortgages and high net worth loans because they have the specialised knowledge, experience, and lender connections you need to achieve the finest customised offer.
Contact us and we’ll arrange a free, no-obligation meeting so we can best assist you in obtaining the financing you require right now.
our private mortgages offerings.
Are you looking for non-bank funding through a private lender?
$500K - $10M+ for private mortgages
Capitalised loan facilities
80-90% LVR & 2-24 month loans
1 mortgage to equity/JV structure - deal dependent
you’re in good company with our happy private finance clients.
CASE STUDY: Recently funded deal
Loan Amount: $1,700,000
Where: Bendigo
Security Type: Mix of Commercial/Land/House
Valuation: $2,360,000
Purpose: Refinance from high interest lender
LVR: 72%
Term: 6 months
apply for a private mortgage today.
tell us who you are.
Fill out an enquiry form or use our live-chat to start the conversation
we process your loan.
We understand that every situation is unique and that yours is no different. That’s why our tailored loan solutions are unique to each of our customers.
you receive funding.
Tell us which bank account you would like the funds sent to. In most cases we are able to source you funding within 48 hours upon approval.
Frequently Asked Questions
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A private mortgage is usually a short term loan taken out from a private lender. This type of mortgage is different from other mortgages since it does not involve any banks or traditional lenders. It generally involves two parties, the private lender and the borrower, and is most often used for people when they are in need of money quickly or do not have access to more traditional forms of financing. Private mortgages also offer higher interest rates than typical loan options, though it may be worth exploring this option if the borrower cannot get approved from bank or other institutional lenders.
Read our blog for more information.
Helpful resources.
Department of Finance
Australian Government
AFCA
Australian Financial Complaints Authority
Money Smart
Australian Government