Refinancing with a private lender when your current loan has run out of road

What does it mean to refinance with a private lender?

When you refinance, a new lender pays out your old loan and takes over as the mortgage holder. With a private lender, that new lender is a non-bank source of funds that assesses your deal differently from a bank.

This matters when mainstream refinance is closed to you. Banks tend to refinance borrowers who look like standard borrowers with standard loans. If your loan is in arrears, has expired, is held by a lender that has changed its mind, or sits alongside a tax debt, you may not look standard. A private lender can step in on the strength of the property and the plan instead.

When is a private refinance the right move?

• Your loan has reached the end of its term and your lender will not extend it.
• Your interest-only period has ended and you cannot meet principal repayments.
• Your lender has issued a default notice and you want to pay them out.
• A bank has declined your refinance because of credit, income or property type.
• You need to move before a settlement, deadline or enforcement date.
• You want to consolidate other debts at the same time.

In each case, the refinance is solving a specific problem. It works best when you also have a plan for the loan’s end, because private loans are generally shorter than mainstream ones.

How is it different from a normal refinance?

Aspect	Mainstream refinance	Private refinance
Decision basis	Income, credit and policy fit	Property, equity and plan
Typical timeframe	Longer process	Can be faster where documents are ready
Term	Long-term	Short to medium
Flexibility on arrears or credit	Limited	Often more
Pricing	Standard products	Individual to the deal
Role	Lasting home for the loan	Often a stepping stone

A private refinance is generally not the cheapest option on paper. It is the option that exists when cheaper ones do not. Our guide on refinancing when your bank says no explains how that decision is usually made.

What do private lenders look at in a refinance?

1. The property: type, location, condition and saleability.
2. The equity: the gap between value and the loan being paid out, plus costs.
3. The reason for the refinance: arrears, expiry, decline, consolidation or timing.
4. The exit: how you will repay or move on, with a believable date.
5. Documentation: payout figure, notices, identification and title details.

The strongest files make the lender’s job easy: a clear payout figure, a short explanation of how the situation arose and a sensible plan for what happens next.

How does Ownright arrange a private refinance?

We start with a conversation about what is driving the refinance and how much time is left. If you have received notices, we ask to see them so we can build the plan around the real dates. The earlier, the better.

Then we think about the exit. A private refinance should lead somewhere: back to a mainstream lender, to a sale on your terms, or to a longer-term structure. Trevor Scott’s decades in finance have shown how often a well-planned private loan becomes the platform for recovery, and how often an unplanned one becomes a trap. We aim for the first.

We then choose lenders by fit, not by accident. Some lenders prefer straightforward residential, others thrive on unusual property or tight timing. Some of the structures we use are ones few brokers know about. If you would like us to look at yours, begin on our apply page.

An illustrative example

Illustrative only. An owner’s interest-only period ended and the lender notified them that repayments would increase sharply. Their bank declined to refinance because of recent irregular income. The home had considerable equity and the owner had a sound plan to rebuild income stability.

A private lender pays out the existing mortgage on a first-mortgage basis for a defined term. The borrower uses that period to establish a cleaner record and then refinances to a mainstream lender. The private loan did what it was designed to do: provide time.

Mistakes to avoid

• Waiting until enforcement begins to explore refinance.
• Taking a private loan without a plan to move on at the end.
• Ignoring costs that are not the headline price, including legal and valuation fees.
• Overborrowing to fund extras, which reduces your equity buffer.
• Not telling your broker about notices, which limits their ability to plan.

Documents to have ready

• Identification for each borrower.
• A recent statement and payout figure for your current loan.
• Any default notices or correspondence from your lender.
• Title details or a rates notice for the property.
• A short summary of what has changed and what the plan is.

Related pages

For the lending style in general see private first mortgages and private lenders in Australia. If a sale has been threatened, read stopping a mortgagee sale. Borrowers whose situation is less pressing may prefer a standard home loan refinance.

How long does a private refinance take?

It depends on the lender, the security and how quickly documents arrive. A straightforward residential property with clear title and a ready payout figure moves faster than a property with complications. Valuation scheduling, legal documents and the discharge process of the old loan all take time, and some of that time sits outside anyone’s control.

When a notice period or a date is running, we work backwards from it. That means collecting the payout figure and title details first, booking valuations early and asking the lender’s solicitors to start document preparation as soon as approval is in place. These small steps often save days.

What happens to my existing lender?

Your existing lender is paid out in full at settlement, including arrears and any costs they are entitled to claim, and their mortgage is discharged from your title. A new mortgage in favour of the private lender is registered at the same time. Your solicitor or conveyancer, working with the lender’s, coordinates this exchange so that both occur on the day.

If enforcement has begun, we advise telling the existing lender that a refinance is underway and giving them the expected settlement date. Lenders tend to be more patient when they can see a real payout coming.

What are the costs of a private refinance?

As with any secured lending, there are several cost categories. They typically include interest, lender and establishment fees, a valuation of the property, legal costs for the new mortgage and the discharge of the old one, and possibly exit fees. We do not publish figures because each loan is priced on circumstances. What we do is lay out every category before you sign and show the position at the end of the term.

If the existing lender is claiming enforcement costs, ask for an itemised statement. Those costs should be reasonable and explained, and a clear breakdown helps the new lender and you.

How do you get out of a private loan?

The cleanest exit is a refinance to a mainstream lender once your circumstances support it. That might follow lodging outstanding returns, showing clean repayment history, completing a project or simply letting a credit event age. Another exit is a sale of the property or another asset. A third is repayment from a lump sum, such as an inheritance or business sale.

We aim to define the route at the start and revisit it part way through the term, so you have time to act rather than a deadline to panic about. If it looks like the planned exit will slip, we begin talking to lenders about options early.

Ready to see what is possible?

Send us the facts of your loan and your property, and we will tell you plainly whether a private refinance makes sense. Start here or call 03 7043 7233.