Quick answer
A private mortgage is a property-secured loan from a private or non-bank lender rather than a bank. For business purposes, it can fund amounts from $20,000 to $5,000,000 secured against residential or commercial property, as a first mortgage, second mortgage or caveat. Private lenders typically focus on the property's value and a clear exit plan, so they can suit businesses that don't fit bank criteria, need speed or have credit or ATO issues.
Key points
- Property-secured lending from private or non-bank lenders
- $20,000 to $5,000,000 against residential or commercial property
- Can be a first mortgage, second mortgage or caveat
- Focus on property value and how the loan will be repaid
- Amounts
- $20k – $5m
- Security
- Residential or commercial
- Positions
- First, second, caveat
- Purpose
- Business only
What is a private mortgage?
A private mortgage is a loan secured by property where the lender is a private or non-bank lender instead of one of the big banks. The mechanics are familiar: the lender registers its interest over the property, you make repayments, and when the loan is repaid the security is removed.
What differs is the lender’s mindset. Banks tend to work through a fixed checklist. Business.gov.au notes that non-bank lenders can have more flexible loan criteria than traditional banks. In practice, private lenders often focus on two questions: what is the property worth, and how will this loan be repaid?
Who are private mortgages good for?
They tend to suit businesses that don’t fit neatly into a bank’s boxes:
- Owners with credit marks or a history that needs explaining
- Businesses with ATO debt they want to clear or consolidate
- Time-sensitive situations, such as a purchase deadline or settlement gap
- Self-employed owners whose financials don’t show the full picture yet
- Opportunities with a clear exit, like a sale or refinance due in a few months
If you’re a strong, established business with clean financials and no time pressure, a bank may be worth trying too. A good specialist will tell you honestly which camp you’re in.
First, second or caveat: which position?
Private mortgages come in three positions, and choosing the right one is step two of the 1-2-3:
| Position | When it fits | Read more |
|---|---|---|
| First mortgage | Property has no loan, or you’re refinancing the existing one | First mortgage business loans |
| Second mortgage | You want to keep your current home loan and borrow against remaining equity | Second mortgage business loans |
| Caveat | Short-term need where a full mortgage is more than required | Caveat loans |
The position affects how much the lender is comfortable lending, how the loan is documented and how quickly it can be set up.
How much can I borrow against property?
Amounts run from $20,000 to $5,000,000, secured against residential or commercial property. The actual figure depends on the property’s value, any existing loans, the property type and location, and your exit plan.
A simple way to think about it:
- Value. What would the property realistically sell for?
- Existing debt. What’s already owed against it?
- Remaining equity. The difference is the room a lender is working within, and they won’t lend all of it.
Illustrative example only. A commercial cleaning company’s owners have a home worth a certain amount with a modest bank loan against it. They want funds to clear an ATO debt and buy two vans. A second mortgage behind the bank loan lets them keep their existing home loan untouched while drawing on part of the remaining equity.
If you’d like to know what your property could support, send us a quick enquiry. There’s no credit check to ask.
What does a private mortgage involve?
Expect more steps than an unsecured loan, but fewer than many people fear:
- Property details: address, title information, rates notice
- A valuation, arranged through the lender
- Existing mortgage statements, if there’s already a loan
- ID and business details: ABN, structure, purpose of the funds
- An exit plan, especially for shorter terms
- Loan and mortgage documents, usually with independent legal advice
If you’re using a private mortgage to help buy property, remember that state taxes may apply to the purchase. In Victoria, for example, the State Revenue Office explains that land transfer duty is paid when you buy property, and every state has its own rules.
What should I ask before signing?
Three questions keep you safe:
- What’s the total cost of finance over the whole term, including establishment and legal fees?
- What happens if my exit is delayed? Ask about extensions and default charges now, not later.
- Can I repay early? If the property sells or the refinance comes through sooner, you want to know the cost of clearing the loan.
Private mortgage myths
Private lending is sometimes misunderstood. Three myths worth clearing up:
“Private lenders only care about the property.” The property matters a great deal, but responsible private lenders also look at the purpose, your situation and, crucially, how the loan will be repaid. A clear exit is central.
“Private mortgages are only for people banks have rejected.” Many borrowers choose private lending for speed, flexibility or because their situation doesn’t fit a bank’s standard policy, such as a self-employed owner with a recent change in income, or a business needing funds before a sale settles.
“Private means unregulated and risky.” Private loans are documented with formal loan and security agreements, and borrowers commonly receive independent legal advice before signing. As with any loan, the risk comes from borrowing more than you can repay or without a clear exit.
The right question isn’t “bank or private?” but “which lender suits this purpose, this property and this timeframe?” Our first mortgage business loans and second mortgage business loans pages explain the two most common private structures in more detail.
Ready to use your property wisely?
A private mortgage can be a powerful tool when it’s matched to a clear purpose and a clear exit. Getting the position and the amount right is what turns equity into a sensible plan.
When you enquire, nothing touches your credit file. A real person reads your situation and calls you to talk it through, and your details aren’t distributed to a long line of lenders. Please describe the property, any existing loan and the purpose accurately, so the first conversation can focus on what will actually work. Ask about a private mortgage.
The 1-2-3, in short
- 1
Check your equity
Estimate the property's value, subtract any existing mortgage, and see how much room is realistically left.
- 2
Choose the position
First mortgage, second mortgage or caveat, depending on whether there's already a loan and how long you need the money.
- 3
Plan the exit
Private mortgages often suit shorter terms. Know whether a sale, refinance or business income will repay it.
Frequently asked questions
What's the difference between a private mortgage and a bank loan?
The lender. A private mortgage comes from a private or non-bank lender, which often has more flexible criteria and puts more weight on the property and the exit plan than on standard bank policy boxes.
Can I use my home as security for a business private mortgage?
Yes, residential property is commonly used, as is commercial property. The loan must be for business purposes. Remember that the property is at risk if the loan isn't repaid.
Are private mortgages only short term?
Many are, because they're often used for bridging, tax debts or opportunities with a clear end point. Longer terms are possible depending on the lender and the situation.
Do private lenders check credit?
Yes, once you decide to proceed, but bad credit and ATO debt are considered case by case. The property and exit plan usually carry more weight than with a bank.