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Private credit Australia: how property-backed lending works
Private credit Australia borrowers encounter is lending by non-bank institutions that use investor or institutional capital rather than bank deposits. Most of it is property-backed finance, where a registered mortgage over real estate secures the debt. It is usually shorter, more flexible and more expensive than a bank loan.
Written by Richard Goodwin, Founder and author, PrivetReviewed by Privet Team, Editorial review team, PrivetLast reviewed 23 October 2026
What private credit is
Private credit is a broad label for loans made outside the banking system. In property, it covers first and second mortgages, bridging, construction and development exits. The lender is typically a fund manager, a specialist finance company or a pooled mortgage fund.
A private credit funder raises money from investors such as super funds, family offices and wholesale investors, then lends it against assets. Because the capital is not deposit money, the lender is not supervised by APRA the way a bank is, but many hold an Australian credit licence or other ASIC authorisations. See the ASIC registers guide to check a lender.
Who provides it
A borrower may deal with a private lender Australia wide, a regional private property lender, a private mortgage lender running a contributory fund, or a larger non-bank lender with warehouse funding. Many describe what they do as specialist property finance or specialist lending Australia borrowers cannot always get from a bank.
| Lender type | Typical capital source | What to check |
|---|---|---|
| Fund manager | Wholesale and institutional investors | Licence, fund documents, track record |
| Specialist finance company | Warehouse or balance sheet | Credit licence, AFCA membership |
| Mortgage fund | Pooled investor money | Fund disclosure, how loans are managed |
What property-backed loans are used for
Private property loans are usually business-purpose or investment loans. Owner-occupied home loans are regulated under the National Credit Code and fewer private lenders offer them. Read about bridging finance and second mortgage loans for the two most common uses.
- Short-term property finance while a sale or refinance completes
- Commercial finance for offices, industrial and retail purchases
- Bridging between buying and selling
- Second mortgages to release equity
- Residual stock and development exit funding
How it differs from a bank
Banks run standardised credit policies and prioritise serviceability. A private lender usually assesses the whole deal: the security, the borrower's plan and, above all, the exit. That can be more flexible on documentation and timing, but it is usually priced higher and runs for months rather than decades.
| Feature | Bank | Private credit |
|---|---|---|
| Main focus | Income and serviceability | Security and exit |
| Typical term | Long | Short |
| Pricing | Lower | Usually higher |
| Policy | Standardised | Deal by deal |
Costs and risks
Expect interest plus establishment, valuation, legal and possibly exit or extension fees. Interest may be paid monthly, prepaid or capitalised. The main risk is the exit failing, leaving a short loan with default interest and enforcement rights. Model total cost with the cost estimator before speaking to anyone.
Private credit and brokers
Many deals reach private lenders through brokers. Mortgage finance for brokers' clients whose files do not fit bank policy is a large part of the market. The private lending for brokers guide covers submissions and referral arrangements.
Frequently asked questions
Is Privet a lender?
No. Privet is an information and calculator resource, not a lender, credit provider or broker. You can send one enquiry to finance providers.
Is private credit regulated?
Lenders are not supervised by APRA like banks, but consumer credit requires an Australian credit licence and ASIC oversees financial services. Business-purpose lending has fewer protections, so check the lender before signing.
Why is private credit more expensive?
Investors expect a higher return for shorter, more complex loans, and the lender carries more risk per deal. Fees and interest structure add to the total cost.
Can I use private credit for a home loan?
Some lenders offer regulated owner-occupier loans, but most private credit is business or investment purpose. Get your own advice on which applies to you.
What do private lenders look at first?
Usually the property security, the loan-to-value ratio and how the loan will be repaid at the end of the term.
Related guides
- Bridging finance in Australia
- Second mortgage loans in Australia
- Commercial property finance
- Property refinance with private and non-bank lenders
- Private lending for brokers
- High-LVR property finance
Glossary: private credit, non bank lender, first mortgage
Run the numbers
Test cost and timing with the matching calculator before you speak to anyone. Then send one enquiry to finance providers.
Cite or share this guide
Privet (2026). Private credit Australia: how property-backed lending works. Retrieved from https://privet.com.au/learn/private-credit-australia
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