Quick answer
Private mortgages are loans secured against property and funded by non-bank private lenders. They include first and second mortgages, bridging, caveat and short-term finance. Lenders focus on the property and the exit plan more than standard serviceability. Ownright Custom Finance arranges private mortgages Australia-wide, for both fast timeframes and longer terms.
Key points
- Private lenders focus on the property, the equity and a believable exit plan
- First, second and third mortgages sit in different ranking positions
- Bridging and caveat loans handle tight timeframes and settlement gaps
- Private loans can suit self-employed, low doc and credit-affected borrowers
- Most private loans are designed to be repaid or refinanced at a planned point
- Suits
- Borrowers with time pressure, complex income, credit issues or unusual security
- Security
- First, second or later registered mortgage, or a caveat
- Terms
- Short-term and longer-term structures, set by the lender and the plan
- Australia-wide
- Yes
What is a private mortgage?
Private mortgages are loans backed by real property, with the money coming from a lender that sits outside the major banks. The security works the same way as any other mortgage: the lender’s interest is registered against the title, and if the loan is not repaid, the property is the ultimate recourse. What changes is the lender’s way of thinking. A bank starts with your income statement. A private lender starts with the property, the equity and the plan.
That shift opens doors. A borrower with strong equity but a messy paper trail, a tight deadline or a recent credit setback may be turned away by a bank and welcomed by a private lender. Our guide to what a private mortgage is covers the basics, and the page on private mortgages goes into the detail.
Who uses private mortgages?
People come to private lending for many reasons, and few of them involve having done anything wrong.
- Property owners who need funds quickly for a purchase, a settlement or an opportunity
- Self-employed borrowers whose paperwork is not up to date or does not fit bank policy
- Business owners wanting to use property equity to support their company
- People with ATO debts, defaults or past arrears who need a path back to mainstream finance
- Investors buying, developing or repositioning property
- Families dealing with a deceased estate, a separation or a property that cannot be sold yet
- Anyone whose bank has declined, delayed or changed its mind
How do private lenders assess a loan?
Private lenders ask a different set of questions to a bank.
How much equity is there? The loan amount against the property’s value matters most. Our guide to what LVR means explains the ratio.
What is the security like? Residential, commercial, rural and vacant land are all assessed differently. Location, saleability and clear title carry weight.
What is the exit? The lender wants to know how and when the loan ends: a sale, a refinance, an incoming payment. We cover this in depth in bridging loan exit strategies.
Who is the borrower? Conduct, experience and honesty still matter. Our guide on how private lenders assess your loan outlines the factors.
What are the main types of private finance?
| Type | Core idea | Typical situation |
|---|---|---|
| Private first mortgage | Lender holds first ranking | Purchase or refinance outside bank policy |
| Second mortgage | Borrows against remaining equity behind a first loan | Funds without disturbing the existing loan |
| Third mortgage | A further ranking behind two loans | Large equity, multiple existing loans |
| Bridging finance | Covers a gap between two events | Buy before you sell |
| Caveat loan | Lodges a caveat to secure quickly | Time-critical, short-term funding |
| Short-term mortgage | Defined term, planned exit | Projects, tax debt, settlements |
| Longer-term second mortgage | Extended term behind a first loan | Borrowers who need time |
Private lender or bank: how do they compare?
Banks are generally lower-cost for clean files, and they should be your first thought if you fit the box. Private lenders are generally faster-moving and more flexible on documents, credit and timing, and they are priced on the individual deal. The guide to private lender versus bank sets the contrast out in more detail, and the page on private lenders in Australia explains how to reach the right one.
The honest rule of thumb: if a mainstream loan is available and suitable, use it. If it is not, or the timing will not work, a private mortgage can be a sensible and structured bridge. Because private loans are generally shorter-term tools, the plan for what comes next matters as much as the loan itself.
What are first, second and third mortgages?
Ranking decides who gets paid first if a property is sold. A private first mortgage puts the lender at the front of the queue, which suits purchases and refinances where no other loan is in place. A second mortgage sits behind the existing loan and uses leftover equity, which means you can often leave the first loan untouched. For borrowers who want a longer runway, longer-term second mortgages are structured with more time, while fast second mortgages are built around urgent funding needs. Where two loans are already registered, a third mortgage may still be possible if equity remains. Our guide to first versus second mortgage ranking explains how the order works.
What is a caveat loan and when is it used?
Lodged against a property’s title, a caveat is a notice that safeguards the lender’s interest. It is lighter than a full mortgage and can be put in place quickly. Our page on caveat loans explained describes how lenders use them, and short-term caveat loans looks at time-critical deals. The guide to what a caveat loan is is a good first read. If the arrangement needs to run longer, the caveat may afterwards be replaced by a registered second mortgage.
How does bridging finance cover a timing gap?
Bridging finance exists for the moment between one financial event and the next. Bridging finance is the general overview, while short-term bridging loans focuses on tight windows with firm plans. Business bridging loans use property to support a company waiting on cash flow or a sale. Related products include interim finance, which holds the line until main funding arrives, and short-term mortgages, which borrow against property for a defined window. For purchases and project timing, see short-term property loans, and for the awkward gap on the day itself, settlement gap loans.
If you are working out how these fit together, the Ownright enquiry page is the quickest way to get a person looking at your numbers.
What if I cannot show standard paperwork or my credit is bruised?
Private lenders can often look past what a bank cannot. Low doc private mortgages suit borrowers who cannot present the usual statements, and private mortgage for the self-employed addresses business owners with irregular income. When history is the barrier, private loans with bad credit explain the property-first approach, and difficult loans is the broader page for files that have been declined elsewhere.
How the loan is repaid matters too. Interest only private loans are built around the exit, and capitalised interest loans allow interest to be added to the loan so no repayments are due while a project runs.
How can private finance deal with tax debt, other debts and refinancing?
When the ATO or other creditors are applying pressure, equity can sometimes be the exit. Refinancing ATO debt explains clearing a tax liability against property, and second mortgage for tax debt looks at doing so before action escalates. Our guide to ATO debt and your property provides the background. Secured debt consolidation pulls several debts into one structure, and refinance with a private lender is for loans that have run out of road. If a lender has started enforcement, stopping a mortgagee sale sets out the options while there is still time, and the guide on how to stop a mortgagee sale adds detail.
Which private loans fit specific purposes?
- Second mortgage for business turns property equity into working capital or growth funding.
- Second mortgage for investment property helps buyers and investors move on an opportunity.
- Private loans on vacant land cover land that banks often treat cautiously.
- Deceased estate and inheritance finance bridges funds while an estate is sorted.
- Property settlement and divorce finance supports buying out a former partner.
Each page explains the situation, how lenders view the security and what the exit usually looks like.
What does a private mortgage look like in practice?
Illustrative scenario only, with no real people or figures. A property owner has found an opportunity that needs a fast decision. Their home carries a first mortgage with comfortable equity remaining, but their income this year has been uneven and their accountant is still finalising the accounts. A bank has said it needs the new financials first.
A second mortgage lets them access the equity without touching the first loan. The lender looks at the property, the existing balance and the plan: once the accounts are finished, the borrower intends to refinance into a mainstream loan. The loan is structured for that window, the exit is written down and the borrower avoids a missed opportunity. The same facts presented as a plain bank application would likely have stalled.
What mistakes do borrowers make with private finance?
- Starting without an exit plan, or with one that depends on a single uncertain event
- Borrowing more than the purpose requires
- Ignoring how long the arrangement is likely to last and what happens at the end
- Not reading the structure: ranking, fees, interest treatment and conditions
- Approaching several private lenders at once without a clear story
- Leaving title problems, unpaid rates or tax issues unaddressed
- Assuming private finance is only a last resort, when sometimes it is simply the right tool
The guide to how fast private lending can settle explains what influences timing.
What documents help a private lender say yes?
You do not need a mountain of paper, but some items speed things up:
- Photo ID and a recent title search or rates notice for the property
- Details of existing mortgages and their balances
- A recent estimate of the property’s value, or consent to arrange a valuation
- A clear statement of the purpose and the exit plan
- Proof of how the loan will be repaid, for instance a sale contract, a route to refinance or a payment due to arrive
- Basic income and asset information, even if it is not full doc
Our guides on how to get a property title search and how to get loan ready explain where to find these.
How does Ownright approach private mortgages?
Private lending is one of our core specialities. Director Trevor Scott has more than 40 years in finance, and the team he leads has handled every flavour of private structure, from straightforward second mortgages to layered, multi-step plans. We look at the property first, then at the plan, then at the lenders who will genuinely be comfortable with both.
We think about what happens after settlement too. Sometimes the best structure is a short-term loan followed by a move into a mainstream product, which is why our home loans hub sits alongside this one. Where a business or personal angle is involved, you may also find answers in business loans or specialist finance. We work Australia-wide from our Knoxfield, Victoria head office. If Ownright cannot find the solution, no one can, and we will tell you plainly where the limits are.
When should I get in touch?
Earlier is almost always better. A settlement date, a notice from a lender or an opportunity with a closing date all leave less room than a week’s notice. If a deadline is already close, send us the details and we will tell you honestly whether private finance fits and how it could work.
Looking for private mortgage finance?
Sounds like you’re looking for private mortgage finance with a sensible exit. We’re the lending experts in private first and second mortgages, so see if you qualify and we will take it from there. Prefer a chat first? Call 03 7043 7233.
How it works, step by step
- 1
Step 1
We discuss the purpose, the property, the equity available and how you plan to repay or refinance.
- 2
Step 2
We choose the right private structure, whether first, second or later ranking, bridging or caveat.
- 3
Step 3
We present the case to lenders suited to the property and the timeframe, and gather the documents they need.
- 4
Step 4
We coordinate valuation, legal documents and settlement, and plan the exit with you from the start.
Frequently asked questions
What is a private mortgage?
A private mortgage is a loan secured against property and provided by a private lender rather than a bank. The lender registers a mortgage over the title and focuses on the property value, the equity and your exit plan. It is often used for short-term, time-critical or non-standard situations.
How is a private lender different from a bank?
Banks follow standardised credit policy and lend on serviceability. Private lenders look more closely at the security and the plan for repayment, so they can respond to situations banks decline. The trade-off is that private loans are usually shorter-term and are priced on the individual circumstances.
What is the difference between a first and a second mortgage?
A first mortgage has priority over other lenders if the property is sold. A second mortgage ranks behind it and uses the remaining equity, usually without disturbing the first loan. Ranking affects risk, so lenders consider the first loan balance and the property value together.
What is a caveat loan?
A caveat loan is finance where the lender lodges a caveat on the property title to protect its interest, often as a faster, lighter step than a registered mortgage. It is typically short-term and can be converted to a registered second mortgage later. It suits time-critical needs with a clear plan.
Can I get a private loan with bad credit or no payslips?
Often, yes. Private lenders usually put the property and the exit plan ahead of credit history and standard income documents. Self-employed, low doc and credit-affected borrowers are common applicants. You still need sufficient equity and a believable way to repay or refinance.
How quickly can a private mortgage settle?
Speed can be possible, but it depends on the lender, the security and how quickly documents and valuations arrive. Simple files with clear title and prepared paperwork tend to move faster. We cannot promise a timeframe, though we plan the process to keep it as tight as the file allows.
What is an exit strategy and why does it matter?
An exit strategy is how the private loan will be repaid or refinanced, such as a property sale, a refinance to a mainstream lender or settlement of an incoming payment. Private lenders want to see it clearly. A sound exit plan often makes the difference between a yes and a no.
Does Ownright arrange private mortgages outside Victoria?
Yes. Our head office is in Knoxfield, Victoria, and director Trevor Scott's team arranges private first, second and short-term mortgages in every state and territory. Most of the process runs by phone, email and secure document sharing, with local valuations and legal steps coordinated for you.