Quick answer
Property investors use private secured loans to settle purchases quickly, release equity across a portfolio, refinance maturing or unwanted bank debt, and fund vacancy or repositioning periods when banks are cautious. Loans are for investment through a business, company or trust, are assessed on the properties and exit, and run from $20,000 to $5,000,000 with no valuation before approval.
Key points
- Settle commercial and investment purchases on tight timelines
- Release equity across several properties
- Refinance when a bank reduces its exposure
- Fund vacancy and repositioning periods
- Interest capitalised while a property is not income-producing
Investors need speed and flexibility
Property investment rewards investors who can act when opportunities appear: an off-market offer, an auction with a motivated vendor, a building that needs work and is priced accordingly. It also tests investors when tenants leave, refurbishments run long or a bank decides to reduce its exposure to a sector. Private secured finance gives investors room to act in both situations.
Common investor scenarios
| Scenario | How private finance helps |
|---|---|
| Off-market or auction purchase | Settles on the vendor’s timetable |
| Portfolio equity release | Unlocks equity across several properties for the next acquisition |
| Bank exits a sector | Refinances a property the bank no longer wants |
| Vacancy | Carries a property with interest capitalised until it is leased |
| Repositioning | Funds refurbishment holding costs before a revaluation and refinance |
| Tax or creditor pressure | Clears a trust’s or company’s debts while assets are sold in order |
How private lenders assess investment property
No valuation is needed before approval. The lender reviews comparable sales, title searches, any leases and the property’s condition. For commercial property, lease length, tenant quality and vacancy in the precinct matter. For portfolios, the combined LVR and the spread of value across properties both count. Our guide to commercial property as security explains the factors.
Vacancy and repositioning
A vacant building is hard for a bank to refinance, because there is no rent to service the loan. A private lender focuses on value and exit, so a vacant property can be carried with interest capitalised while it is leased. Once a tenant signs, the investor refinances to a bank, which repays the private loan. The same logic applies to a refurbishment that will lift rent and value.
Discuss a purchase, refinance or equity release across your portfolio.
Structures and entities
Investors often hold property through companies, unit trusts or discretionary trusts. The borrowing entity, security providers and guarantors need to be clear. Loans on this site are for business purposes, including investment carried on as a business; self-managed super fund borrowing has separate rules and is not covered here.
An illustrative investor
Illustrative only. A family trust owns three small commercial properties. Its bank reviews its commercial lending policy and asks the trust to refinance one of them, a strip shop that has just lost its long-term tenant. A private first mortgage over the shop, with a second mortgage over another of the trust’s properties, repays the bank with interest capitalised. The shop is re-leased within six months, and another lender refinances it on standard terms.
Exit strategies for investors
- refinance to a bank once the property is leased or revalued
- sale of a property within the portfolio
- refinance of the whole portfolio with a new lender
- rental income and other investment returns over the term
Mistakes to avoid
- assuming a vacancy will be filled quickly without evidence from leasing agents
- cross-securing without clear release terms for each property
- forgetting land tax and outgoings during vacancy
- relying on a single exit when the market is changing
Using equity in one property to buy another
The most common investor use of private finance is releasing equity from an existing property to fund the deposit and costs on the next. Where a bank will not increase lending because of overall exposure or serviceability calculations, a second mortgage or caveat behind the existing loan can provide the deposit quickly. Once the new purchase settles and is leased, the portfolio can be refinanced as a whole.
Interest and the investment case
Capitalising interest during a vacancy or refurbishment preserves cash, but it does increase the balance. Run the full investment case: the expected rent once leased, the value after works, the refinance amount a bank is likely to offer and the total cost of private funding during the gap. If the numbers work at a conservative rent and value, the private loan is a sensible bridge. If they only work at optimistic figures, think again.
Commercial versus residential investment
Residential investment property is generally the easiest security, with deep buyer demand and consistent pricing evidence. Commercial investment depends more on lease quality and the local market. Industrial property has been in strong demand in many Australian markets. Specialised property, such as hospitality or childcare buildings, is assessed case by case. A mixed portfolio can work well as combined security.
A schedule makes it simple
Prepare a one-page schedule listing each property, its owner entity, estimated value, lender, loan balance and rent. It lets a specialist see the whole position at a glance and identify which properties offer the best security.
Keep your portfolio moving
Investors who can act quickly and hold through difficult patches tend to do better over time. Tell us about the property or portfolio, existing debts, the purpose and the exit, and a specialist will tell you how private finance can help. There is no credit check when you first enquire, your enquiry is handled by one team, and a schedule of properties and loans helps us respond quickly. Make an investor enquiry.
Frequently asked questions
Can investors use private secured loans?
Yes, for investment carried on as a business, typically through a company or trust, such as commercial property investment or a portfolio held for business purposes.
Why would an investor use private finance over a bank?
Speed on purchases, flexibility during vacancies or refurbishments, and help when a bank reduces its appetite for a property type or the investor's overall exposure.
Can a vacant commercial property secure a loan?
Yes. Vacancy affects the LVR and the exit, but private lenders assess the property's value and the leasing plan rather than requiring rental income.
Can I cross-secure several properties?
Yes. Several properties can secure one loan, which can increase the amount or improve the LVR.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.