Understanding private lending rates helps you budget accurately and find competitive pricing. Here's the complete guide to current Australian private lending rates.
Current Private Lending Rates (2025)
Residential Property Loans
First Mortgage:
- Prime credit: 7-10% p.a.
- Standard credit: 9-13% p.a.
- Credit impaired: 12-16% p.a.
Second Mortgage:
- Prime: 9-12% p.a.
- Standard: 11-15% p.a.
- Credit impaired: 14-20% p.a.
Commercial Property Loans
- Standard: 8-14% p.a.
- Higher risk: 12-18% p.a.
Bridging Finance
- Monthly rate: 1.5-3% (18-36% p.a.)
- Bank bridging: 0.8-1.5% monthly
- Private bridging: 1.5-3% monthly
Caveat Loans
- Standard: 2-4% per month (24-48% p.a.)
- Ultra-short term: Up to 5% monthly
Business Loans
- Property-secured: 8-14% p.a.
- Asset-secured: 10-16% p.a.
- Unsecured: 15-25% p.a.
Development Finance
- Residential development: 10-14% p.a.
- Commercial development: 11-16% p.a.
- Higher risk: 14-20% p.a.
What Affects Your Private Lending Rate?
1. Security Quality (Biggest Factor)
Lower Rates:
- Metropolitan property
- Houses (vs apartments)
- Good locations
- Standard construction
Higher Rates:
- Regional property
- Unusual construction
- Flood/bushfire zones
- Units in oversupplied areas
2. Loan-to-Value Ratio (LVR)
- 50% LVR: Lowest rates
- 60% LVR: Standard rates
- 70% LVR: +0.5-1% higher
- 75%+ LVR: +1-2% higher
Example: $500k property, pristine credit:
- $250k loan (50% LVR): 8% p.a.
- $300k loan (60% LVR): 9% p.a.
- $350k loan (70% LVR): 10% p.a.
- $375k loan (75% LVR): 11% p.a.
3. Credit History
- Perfect credit: Base rate
- Paid defaults (1-2): +1-2%
- Multiple paid defaults: +2-4%
- Unpaid defaults: +3-5%
- Discharged bankruptcy: +4-7%
- Current bankruptcy: +7-10% (if approved)
4. Loan Term
- 6 months: Often higher monthly rate
- 12 months: Standard rate
- 24 months: Standard rate
- 3-5 years: Sometimes slightly lower
5. Loan Amount
- Under $100k: May be higher rate (smaller deals)
- $100k-$500k: Standard rates
- $500k-$1M: Competitive rates
- $1M+: Often best rates (preferred loan size)
6. Speed Required
- Standard (14-21 days): Base rate
- Fast (7-14 days): Base rate or +0.5%
- Urgent (3-7 days): +0.5-1%
- Emergency (<3 days): +1-2%
Private Lending Rate Comparison
Example: $400,000 Loan
Scenario 1: Perfect Borrower
- Property: House, inner Sydney
- LVR: 60%
- Credit: Perfect
- Term: 24 months
- Rate: 8% p.a.
- Interest (I/O): $32,000/year
Scenario 2: Standard Borrower
- Property: Unit, middle suburbs
- LVR: 70%
- Credit: 1 paid default
- Term: 24 months
- Rate: 11% p.a.
- Interest (I/O): $44,000/year
Scenario 3: Credit Impaired
- Property: House, outer suburbs
- LVR: 65%
- Credit: Discharged bankruptcy
- Term: 24 months
- Rate: 15% p.a.
- Interest (I/O): $60,000/year
Difference: $28,000/year between best and worst scenarios
How to Get the Best Rate
Strategies:
1. Improve Your LVR
- Larger deposit = better rate
- 60% vs 75% LVR = save 2-3% p.a.
- Every 5% LVR reduction helps
2. Choose Right Property
- Metropolitan over regional
- House over apartment
- Good suburb over borderline
3. Shop Around
- Get 3-5 quotes
- Rates vary significantly between lenders
- Some specialize in different situations
4. Negotiate
- Rates often negotiable
- Especially for larger loans
- Good equity position = leverage
5. Time Permitting
- Allow 14-21 days = better rate
- Rush = premium pricing
6. Professional Presentation
- Clean application
- All documents ready
- Clear purpose and exit strategy
Rate vs Total Cost
Remember: Lowest rate ≠ Lowest cost
Lender A:
- Rate: 9% p.a.
- Establishment: 2% ($8,000)
- Monthly fee: $150
- Year 1 total: $36,000 + $8,000 + $1,800 = $45,800
Lender B:
- Rate: 10% p.a.
- Establishment: 1% ($4,000)
- Monthly fee: $0
- Year 1 total: $40,000 + $4,000 = $44,000
Lender B cheaper despite higher rate!
Fixed vs Variable Rates
Most private loans:
- Fixed rate standard
- Variable rare
- Rate set at settlement
Advantage of fixed:
- Budget certainty
- No surprise increases
Watch for:
- Rate review clauses
- Extension rate increases
Regional Rate Differences
Sydney/Melbourne:
- Most competitive rates
- High lender volume
- Typical: 7-15% p.a.
Brisbane/Perth/Adelaide:
- Competitive rates
- Good lender options
- Typical: 8-15% p.a.
Regional Areas:
- Fewer lenders
- Higher perceived risk
- Typical: 10-18% p.a.
- Lower LVRs
Ready to compare private lending rates? Get competitive rate quotes.