What Is Private Lending?
Private lending refers to loans provided by non-bank, private lenders — individuals, family offices, or private credit funds — rather than by mainstream banks or authorised deposit-taking institutions. In Australia, private lending in the mortgage context almost always involves a loan secured by a registered charge over real property.
The fundamental distinction between private lending and bank lending is not the security — both use property as collateral — but the way in which the loan is assessed. Banks assess borrowers using income, employment, credit history, and a range of compliance-driven criteria. Private lenders assess loans primarily based on the value of the security property and the credibility of the borrower's exit strategy — how they intend to repay the loan when it matures.
This difference in assessment methodology is what makes private lending accessible to a wide range of borrowers who simply do not fit a bank's template — including the self-employed, those with complex income structures, borrowers with adverse credit history, and anyone who needs to move faster than a bank can.
Who Uses Private Lending?
Private lending is used across a broad spectrum of borrowers and situations. It is not a product of last resort — it is a deliberate choice made by sophisticated borrowers who value speed, flexibility, and certainty over the lowest possible interest rate. Common users of private lending in Australia include:
- Self-employed business owners whose income is legitimate but difficult to document in the format banks require
- Property investors with multiple assets and complex depreciation and rental income structures
- Developers who need fast site acquisition funding or rescue finance during construction
- Borrowers who have been declined by banks due to credit issues, defaults, or court judgements
- Business owners who need working capital fast — secured against property equity rather than business revenue
- Anyone facing a time-critical transaction where bank timelines are simply incompatible with the opportunity
How Private Loans Are Structured
Private loans in Australia are typically structured as interest-only facilities — meaning the borrower pays interest monthly and repays the principal in full at the end of the loan term. This structure preserves cash flow during the term of the loan and keeps monthly obligations manageable.
Loan terms for private lending in Australia are generally short — ranging from one month to 24 months depending on the lender and the purpose. This short-term nature is intentional: private loans are designed as bridging or transitional facilities, not long-term home loans. The expectation is that the borrower will refinance to a lower-cost facility, sell the property, or otherwise exit the private loan within the agreed term.
Private Lending vs Bank Lending — The Key Differences
Understanding the genuine differences between private and bank lending helps borrowers make better decisions about which product is right for their situation. Private lending offers speed, flexibility, and accessibility. Bank lending offers lower rates and longer terms. Neither is universally better — the right choice depends entirely on the specific circumstances.
- Approval timeframe: private lenders operate in days, banks in weeks or months
- Income documentation: private lenders do not require payslips or tax returns
- Credit history: private lenders assess adverse credit case-by-case rather than applying blanket exclusions
- Property types: private lenders accept a wider range of security types and locations
- Loan purpose: private lenders are flexible on purpose for business and investment loans
- Interest rates: private loans carry higher rates than bank loans to reflect the additional flexibility and risk
Is Private Lending Regulated in Australia?
Yes. Private mortgage lending in Australia is regulated under the National Consumer Credit Protection Act 2009 for consumer-purpose loans, and under Australian Credit Law more broadly. Mortgage brokers arranging private loans must hold or act under an Australian Credit Licence issued by ASIC. Blue Vista Capital holds ACL No. 385602 and operates in full compliance with all applicable legislation.