Private mortgage lending is a narrower tool than most introductions to it suggest. It solves a specific problem: property-secured funding on a timeline or a file shape the bank channel cannot serve, repaid from a defined event rather than from income over decades. Used for that, it is efficient. Used for anything else, it is expensive.
This page sets out what these lenders are, how a file actually runs, what drives the cost, how the sector is regulated, and, the part most pages leave out, when a private mortgage is the wrong answer.
What is a private mortgage lender?
A private mortgage lender is a non-bank credit provider that funds property-secured loans from wholesale or private capital rather than retail deposits. The security is a registered mortgage over real property. The assessment centres on the asset, the sponsor and the exit, rather than the serviceability formula a bank applies.
The category spans large established non-banks, specialist private credit firms, mortgage funds, family offices and unlicensed individuals lending deal by deal. They differ considerably in ticket size, security appetite and how quickly a real credit decision can be reached, which is why “private lender” on its own says less about terms than most borrowers expect.
How private mortgage lenders work
Below is how a file runs through a broker-channel lender such as Archer Wealth. Lenders that take retail enquiries directly start with an application instead, but the middle of the process is much the same, and it is worth knowing because it explains where time actually goes.
- Scenario. The broker puts the shape of the deal to the lender: security, position, amount, purpose and exit. No application forms at this stage.
- Indicative terms. The credit team returns a view on rate, position, tenor and conditions. On a clean file this is quick; the constraint is how directly the broker can reach someone who can actually decide.
- Formal assessment. Supporting documents and an independent valuation on the security, then a credit decision.
- Settlement. Solicitors exchange and funds settle. Where the facility sits behind an existing first mortgage, the first mortgagee's consent usually governs the timetable.
Timing depends on the file rather than the lender's marketing. Clean title, a responsive valuer and a cooperative senior lender move a file; a contested title or an absent valuation does not, whoever is funding it.
Private lender or bank, what is different?
The honest summary is that banks and private lenders are solving different problems, and the comparison only makes sense per file.
- Assessment. A bank underwrites to a centralised serviceability formula. A private lender underwrites the asset, the sponsor and the exit.
- Speed. Private lenders generally reach a decision faster, because the decision is made by a smaller team closer to the file.
- Cost. Private capital costs more than deposits, and underwriting is bespoke rather than automated. Against an equivalent bank facility, private lending prices above it, typically by 200 to 400 basis points.
- Term. Bank mortgages run for decades. Private mortgages are short-dated and written against an exit.
For a longer treatment, this private credit vs bank lending comparison sets the two side by side.
When a private mortgage is the wrong answer
Most pages on this subject are written to sell the product. This section exists because the more useful thing a lender can tell you is when not to use one.
- Long-term holds. A private mortgage is priced for a short-dated facility. Held for years, the cost difference against a bank facility compounds into a very expensive decision. If the plan is to hold the asset indefinitely and a bank will lend, the bank is the right answer.
- Files with no defined exit. These facilities are repaid from an event: a sale, a refinance, a business outcome. Without a credible one, a short-dated facility postpones a problem at cost rather than solving it.
- Files a bank will do in time. If the bank channel can meet the deadline and the file fits policy, use it. Paying a premium for speed only makes sense where the speed is actually needed.
A lender saying “not this one” early is worth more than one that writes the file and lets the borrower discover the cost later.
How to choose a private mortgage lender in Australia
The Australian private mortgage market spans large established non-banks, specialist private credit firms, mortgage funds, and family-office capital. They differ on speed, ticket size, security appetite, broker network, and the depth of their own credit team. When choosing a private mortgage lender, three things matter more than headline rate on a short-dated file.
- Credit team access. A real credit decision is made by people, not a template. Lenders whose brokers can pick up the phone to credit and get a view on a scenario lose less time on the part of the process the lender actually controls.
- Funding source transparency. Where the lender sources its capital affects how it underwrites and how stable the appetite is. Wholesale-funded private credit firms typically run disciplined underwriting and steady appetite through cycles.
- Exit discipline. Strong private lenders size to the exit, not the entry. A lender willing to write a file with an unrealistic exit is not doing the borrower a favour. The exit is the centre of the credit conversation, refinance pathway, sale, or business event.
What does a private mortgage cost in Australia?
Cost on a short-dated facility is not the headline rate. It is the rate over the actual term, plus the establishment fee, valuation and discharge costs, measured against what the transaction is worth. Interest runs from the day funds are advanced to the day the exit clears, not from the day you apply, so a facility at a higher rate held for two months can cost less in total than a cheaper one held for five.
Archer Wealth's published rates are set by the security type, residential, commercial or vacant land, and the LVR band the file sits in. Bridging is not a separate rung: it describes purpose and tenor, and a bridging facility can itself be written as a first or a second, so it prices off whichever security it takes. Ranking, sponsor, exit and structuring are part of the credit decision and of where a particular file lands, rather than a separate published rate. Current rates and bands are published in full on the rate card for brokers, and the bridging cost calculator models interest, establishment and exit costs on a specific scenario. It deliberately leaves out valuation, legals and mortgage stamp duty, so treat its output as the funding cost rather than the settlement figure, the calculator page sets out what to add.
Is private mortgage lending regulated?
Financial services licensing and consumer credit licensing are different regimes. Which requirements apply depends on the entity, its activities, the borrower and the purpose of the credit. An Australian financial services licence does not guarantee an investment and is not a substitute for APRA prudential supervision. Loans are subject to credit assessment and approval; property-secured lending carries the risk of loss of the security on default.
Placing a file
Origination differs by lender: some private lenders write retail files directly, others are broker-channel only. Either way, a broker who knows the lender's criteria will establish whether a file fits before a client is taken through an application, which is the difference between a fast answer and a late decline. Criteria, the rate card and what needs a conversation first are published for private lenders Australia on the main lending page.