Quick answer
A private mortgage for the self-employed is a property-secured loan from a non-bank lender that looks at the security, the equity and your overall position rather than relying only on tax returns. It suits sole traders, contractors and company directors with irregular income, ATO debt or missing paperwork. Ownright Custom Finance arranges these loans Australia-wide.
Key points
- Property and equity take centre stage, not just last year's tax return
- Suits irregular income, new businesses and late lodgements
- Short-term and longer-term structures are possible
- A plan to move back to mainstream lending can be built in
- Suits
- Sole traders, contractors, company directors and trust owners
- Security
- Residential, commercial or rural property
- Documents
- Often lighter than a bank would ask for
- Australia-wide
- Yes
What is a private mortgage for the self-employed?
A private mortgage for the self-employed is a loan secured by property from a non-bank lender who judges the deal mainly on the security, the equity and your overall position. Bank lending to the self-employed is built around two years of tax returns and a tidy business. Many capable business owners cannot show that, even though they can service a loan. The private route offers a way forward.
Self-employed people are a broad group: sole traders with an ABN, company directors, partners, contractors paid through a company or trust, seasonal operators, and new business owners. Their incomes move around. Deductions reduce taxable profit. A year of investment in equipment can make the numbers look weak. Private lenders tend to read this more flexibly, provided the property gives them sound comfort.
When does a self-employed borrower look at private lending?
- Not enough trading history. The business is under two years old, or income changed sharply.
- Returns not lodged. Tax returns or BAS are behind, so mainstream lenders cannot assess you.
- ATO debt. A debt or payment plan is in the way of a bank approval.
- Declining or erratic profit. A lean year has dragged the average down.
- Complex structures. Trusts, multiple entities and related-party loans make the numbers hard to read.
- Credit blemishes. A default or late payments sit on file.
- A tight timeline. A purchase, refinance or business opportunity needs funds faster than a bank can deliver.
What do private lenders look at?
The security. A well-located, easily sold property is the anchor. Residential, commercial and rural property can all work, though lenders differ on what they like.
The equity. The more equity in the property, the more room a lender has. Our LVR guide explains how the ratio is used.
The purpose and the exit. Lenders want to know what the money is for and how it will be repaid, whether by a refinance, a sale, trading income or the clearing of a tax debt.
Your story. Why do the numbers look the way they do? A reasoned explanation backed by bank statements or an accountant’s letter goes a long way.
Credit history. Considered, but not always decisive. Recent, unresolved problems matter more than old, settled ones.
Private mortgage versus the other self-employed options
| Option | Paperwork | Best for |
|---|---|---|
| Full-doc bank loan | Two years of returns, BAS, statements | Established, tidy financials |
| Low doc loan | Declaration, BAS or bank statements | Good trading, imperfect tax returns |
| Low doc private mortgage | Light, with security the focus | Complicated income or short timelines |
| Private first mortgage | Property-led | Refinance or purchase where banks decline |
| Second mortgage | Property-led, sits behind an existing loan | Keeping a good first mortgage while raising funds |
The honest trade-off is cost: private finance generally costs more than a bank loan, and fees can be higher. It earns its place when it unlocks an outcome a bank cannot deliver in time, with a plan to step back to cheaper finance. Our private lender versus bank guide sets out the comparison.
How Ownright works with self-employed borrowers
Trevor Scott has spent more than four decades arranging finance for people who run their own show, and the pattern is familiar. The business is sound, the paperwork is not, and the clock is ticking. We start by asking how the business actually makes money, because that conversation usually reveals which lender and which structure will fit.
We then look at the property and any extra security, the purpose and the exit, and approach private lenders accordingly. Where a mainstream lender could work with a few months of tidying, we say so, because the cheapest finance is the best finance when time allows. Where it cannot, we find the private option and help you plan the way back. We work Australia-wide, from capital cities to country towns.
An illustration
Illustrative scenario only. A contractor has run a small company for eighteen months after years as an employee. Income has been strong but irregular, the first company tax return is not yet lodged, and a supplier is offering a business opportunity with a short fuse. The contractor owns a home with good equity. A private mortgage secured over the home provides the funds, with a plan to lodge returns and refinance to a lower-cost loan once the trading history builds.
What if I have a tax debt as well?
Many self-employed borrowers carry an ATO debt, often because cash flow did not match the tax calendar. A private mortgage can sometimes clear the debt and stop further action, replacing it with a loan secured against property. That is a significant decision, so it is worth understanding the options. See ATO debt refinance, second mortgage for tax debt and the guide on ATO debt and your property.
Mistakes to avoid
- Applying with several lenders at once and collecting multiple credit enquiries
- Hiding a tax debt or default, which lenders will find anyway
- Borrowing short without a clear way back to cheaper finance
- Mixing personal and business expenses so statements are hard to read
- Letting returns or BAS fall further behind while you wait for finance
- Assuming a private lender will accept any property or any story
Documents to have ready
- Photo ID and details of the property offered as security
- Recent bank statements for personal and business accounts
- Latest tax returns and notices of assessment, if available
- BAS or an accountant’s letter summarising income
- A summary of debts, including any ATO arrangement
Our guides on how much a self-employed borrower can borrow, proving income without payslips and getting an accountant’s letter will help you gather what is useful.
Ready to talk through your options?
Sounds like you’re looking for a private mortgage that works for a self-employed income. We’re the lending experts in finance for business owners who do not fit the bank mould, so click the button below and see if you qualify, or give us a call on 03 7043 7233.
How it works, step by step
- 1
Step 1
Tell us about the business, how income is earned and what the loan is for.
- 2
Step 2
We assess the property, equity and any complications, such as tax debt or missing lodgements.
- 3
Step 3
We approach private lenders comfortable with self-employed borrowers and your type of security.
- 4
Step 4
Documents are signed, the funds are released and we plan the path to cheaper finance if that is the goal.
Frequently asked questions
How is a private mortgage different from a low doc home loan?
A low doc loan, usually from a mainstream or specialist lender, relaxes the paperwork but still tests your ability to repay. A private mortgage places more weight on the property, the equity and the exit. It can suit people with tax debts, late returns or complex structures. We explain which is the better fit.
Can I get a private mortgage if my tax returns are behind?
Sometimes. Private lenders may lend on a property basis while returns are brought up to date, provided there is enough equity and a believable exit. Lenders still want to understand the situation, so honesty helps. Lodging outstanding returns usually widens your options, and we can talk through the sequence.
Do I need to prove my income for a private mortgage?
Some lenders want little income evidence, others want a summary of how you earn and repay. The more comfortable the security and equity, the lighter the evidence usually is. Bank statements, an accountant's letter or BAS can help. We tell you what each lender expects up front.
Can I use a private mortgage to buy a home or investment?
Yes, in some cases, and also to refinance, pay a tax debt, fund a business purchase or release equity. The purpose matters because lenders treat consumer and business purposes differently. Describe the purpose clearly and we will match it to suitable lenders.
Is a private mortgage a long-term solution?
It can be, but many borrowers use it as a bridge while they tidy up financials, lodge returns or build a trading history, then refinance to a mainstream lender. Others stay longer if the structure suits them. We plan the likely exit from the start.
Does my business structure matter?
It can. Sole traders, companies, partnerships and trusts each have different paperwork and borrowing rules, and lenders may ask for guarantees or director details. Structure affects who signs and who is liable. Our team can explain how your structure is likely to be treated before you apply.