Private Property Finance: Complete Guide for Australian Property Investors

Private property finance offers investors fast, flexible funding when banks decline or timing is critical.

What is Private Property Finance?

Private property finance is property lending from non-bank private lenders, secured by residential or commercial property mortgage.

Types:

Investment property purchase
Property development
Bridging finance
Equity release
Renovation funding
Portfolio expansion

Why Property Investors Use Private Finance

Speed:

Auction wins (7-day settlement)
Off-market opportunities
Vendor wants quick sale
Beat other buyers

Flexibility:

Multiple properties already
Complex ownership structures
Trust/company ownership
Cross-securitization

Approval:

Banks at lending limit
Credit issues
Self-employed income
Recent property purchases

Private Property Finance Rates

Residential Investment:

Standard: 8-13% p.a.
Credit impaired: 12-16% p.a.

Commercial Property:

Standard: 9-14% p.a.
Specialist: 11-16% p.a.

Bridging/Short-term:

1.5-3% per month (18-36% p.a.)

Investment Strategy: Using Private Finance

Scenario: Property Investor

Opportunity:

Undervalued property: $600,000
Rental yield: 6% ($36,000/year)
Can add $100,000 value with renovation

Challenge:

Bank won't lend (5 properties already)
Auction in 2 weeks
Would lose to other buyers if wait

Private Finance Solution:

$480,000 private loan @ 11% p.a.
Interest: $52,800/year
Rental income: $36,000/year
Out of pocket: $16,800/year

12 Months Later:

Renovated: $50,000 cost
New value: $750,000
Refinance to bank @ 7% p.a.
New interest: $33,600/year (vs $52,800)
Rental covers most interest

Result:

Secured property that would have missed
Added $100,000 value (cost $50k reno + $17k interest)
Net gain: $33,000 in 12 months

Requirements

✅ Property equity or deposit (25-30%) ✅ Exit strategy (refinance, sale, or rental income) ✅ Property in acceptable location/type ✅ Valid investment purpose

LVR: Typically 65-75%