Private first mortgage business loans

When a bank says “not yet”, “not this quarter” or simply “no”, a business that owns real estate still has a way forward. A private first mortgage lets you borrow against property you hold, with the lender taking first place on the title and the decision made by people who look at the asset and the plan rather than a scoring model.

This page explains how the loan works, what it suits and doesn’t, how it is registered, what reaches your account and what goes into the price.

What is a private first mortgage business loan?

It is a loan from a private, non-bank lender, secured by a registered mortgage that ranks first on the title of your property. “First” is the important word. If the property is ever sold to repay debt, the first mortgagee is paid before anyone else with a registered interest.

With our lending partner fundU, the main settings are:

• Loan sizes from $20k to $5m, for business purposes only.
• Security over residential, commercial or industrial property. Vacant land and rural holdings are looked at case by case.
• Terms of 1 to 24 months — long enough to complete a plan, short enough to keep it focused.
• Interest that can be prepaid or capitalised (added to the loan), arranged per deal, so there may be no monthly repayments while the loan runs.
• No formal valuation required. The lender assesses the property itself, so there is no report fee and no wait for an inspection.

Because the lender holds first-ranking security, a first mortgage is usually the most efficiently priced form of private property lending. A second mortgage or caveat ranks behind an existing lender and generally costs more for that reason. If you have a bank loan you would rather keep, read our guide to second mortgage business loans alongside this one.

How does a private first mortgage compare with a bank loan?

Banks and private lenders are built for different jobs. A bank is designed for long, heavily documented lending. A private lender is designed for short, decisive lending where timing is the real problem.

	Bank business loan	Private first mortgage
Decision mainly based on	Credit score, financials, servicing models	Property equity and the exit plan
Paperwork	Years of financials, tax returns, BAS	Property details, what’s owing, the exit
Property assessment	A formal report is usually ordered	No formal valuation required
Term	Often many years	1 to 24 months
Repayments	Monthly	Interest can be prepaid or capitalised
Credit history problems	Frequently a hard stop	Considered case by case
Speed	Weeks, sometimes months	Funding possible within 24–48 hours once documents are in

Neither is “better”. Plenty of borrowers use a private first mortgage to fix a short-term problem, then move back to a bank once the problem is solved.

How does a private first mortgage work, from enquiry to refinance?

The life of the loan has a beginning, a middle and a planned end:

1. Enquiry and call. You describe the property, the existing debt, the amount and the purpose in about 60 seconds, then a specialist calls to test the exit.
2. Indicative terms. Amount, term (from 1 to 24 months), and whether interest is prepaid, capitalised or a mix.
3. Documents and payout figures. ID, entity papers and, where a bank is being replaced, a formal payout figure from that bank.
4. Letter of Offer. Every cost is listed. Your solicitor explains the documents before you sign.
5. Settlement. In one electronic workspace, any existing mortgage is discharged, the new first mortgage is lodged and funds move.
6. The term. With prepaid or capitalised interest there may be nothing to pay monthly. Your job is to deliver the exit: trade, finish, sell or get the accounts ready for a bank.
7. Repayment. The sale settles or the bank refinances, the loan is repaid and a discharge clears the title.

Can a private first mortgage pay out my bank?

Yes. Refinancing out of a bank is one of the most common reasons to use one. The bank issues a payout figure, the private lender pays it at settlement, the bank’s mortgage is discharged and the new first mortgage is registered in the same transaction, so there’s no moment when the property is unsecured or double-mortgaged.

It’s worth doing when the bank is the problem rather than the price: a facility that won’t be renewed, a loan in arrears, a covenant breach or a refusal to lend for a legitimate business need. It’s rarely worth doing just to raise a small extra amount behind a well-priced bank loan; a second mortgage often suits that better. The full mechanics are on refinancing a bank first mortgage.

Can I borrow against a property that’s fully paid off?

Yes, and a debt-free property is the simplest security of all. With no existing lender there’s no payout figure to chase and no one else’s consent to obtain, so these loans often settle quickest. Owners commonly release equity from an unencumbered factory, shop, rental or holiday property to fund stock, a purchase or a tax bill, then refinance or sell at the end of the term. Read more on the unencumbered property loan page.

What do business owners use a private first mortgage for?

The common thread is a deadline the bank can’t meet. Typical purposes include:

• Paying out a bank that wants to exit, or refinancing before a facility expires.
• Clearing an ATO debt or overdue BAS so the business can trade on cleanly. ATO general interest charge incurred on or after 1 July 2025 is no longer tax deductible, which makes a lingering tax debt more expensive than it used to be.
• Completing a property purchase where settlement can’t wait for bank approval.
• Releasing equity from a debt-free property to fund stock, equipment or a large contract.
• Bridging the gap between buying a new site and selling an old one.
• Buying out a business partner or tidying up scattered business debt.

The purpose must be a business one, and that includes property investment and development run as a business.

How does a private first mortgage compare with the other options?

The bank-versus-private table above is only part of the picture. Here’s how a private first mortgage sits against the other ways to raise money from property:

Option	Rank on the title	Typical timing	Best fit	Trade-off
Private first mortgage (this page)	First	24–48 hours possible once documents are in	Debt-free property or replacing a bank	Short term; needs a firm exit
Bank refinance	First	Weeks to months	Long-term debt at bank pricing	Servicing tests and full financials
Registered second mortgage	Second, behind the bank	Days, plus consent time	Keeping a good bank loan in place	Generally costs more; consent may be needed
Caveat loan	A caveat, not a mortgage	Often the quickest	A brief, urgent gap	Lapsing rules; short horizon
Bridging loan	Any of the above	Depends on the security	Buying before selling	The sale must actually happen
Selling the property	No loan at all	Weeks to months	An asset you no longer need	Costs, timing and possible capital gains tax

Who uses private first mortgages?

First mortgages suit industries where valuable property and lumpy cash flow sit side by side:

• Transport and logistics operators who own their depot and need to fund new trucks or clear a tax debt. See transport and logistics.
• Wholesalers and importers with a warehouse and a seasonal stock build. See wholesale and import.
• Motel, caravan park and tourism owners refinancing out of a bank that is reducing exposure to the sector. See accommodation and tourism.
• Farmers and agribusinesses, where rural security is considered case by case, bridging between harvests or a land sale. See farming and agribusiness and regional and rural property loans.
• Medical and dental practice owners buying their rooms or a second clinic. See medical and dental practices.

Who is a private first mortgage suited to?

It suits a business owner who has meaningful equity in property, a purpose the bank can’t or won’t meet in time, and an exit that would convince a sceptical friend. Typical borrowers have one of these in hand:

• a bank letter with a deadline;
• a purchase contract with a settlement date;
• an ATO debt with a payment date;
• a sale, refinance or contract payment expected within 24 months.

When this isn’t the right move

A private first mortgage is short-term money with a purpose. Look elsewhere when:

• Your bank loan is good and you need a little more. A second mortgage or caveat behind it usually costs less than replacing the whole debt.
• You want long-term debt. If there’s no exit within 24 months, a bank or a sale is the honest answer.
• The property is hard to sell and the plan relies on selling it. Specialised or remote property may be considered case by case, but an exit that depends on a quick sale of an unusual asset is fragile.
• The business is losing money every month. Refinancing buys time, not profit. Fix the trading first with your accountant.
• The loan is for a home to live in. These are business-purpose loans only.

How is a private first mortgage registered and settled?

The mortgage is a dealing lodged with the land titles office in the state where the property sits, and across most of Australia that now happens electronically. In NSW, all land dealings have had to be lodged electronically since 11 October 2021, the same day paper certificates of title were cancelled. In Victoria, the Registrar does not accept paper lodgment of mandated instruments except where an electronic network can’t be used, and Land Use Victoria lists PEXA, Sympli and SPEAR as the electronic lodgment networks operating there. In Western Australia, Landgate has required mortgages, discharges of mortgage and transfers to be lodged electronically since 1 December 2018.

In practice, settlement runs like this:

1. Your solicitor or conveyancer and the lender’s solicitor join the same electronic workspace.
2. Any existing mortgage is discharged and the new first mortgage is lodged as the funds move.
3. The registry records the new mortgage — in Victoria, mortgages and discharges are typically registered very soon after lodgment.

Owners sometimes ask whether the loan also appears on the PPSR. It doesn’t need to. The Personal Property Securities Register covers property other than land, buildings and fixtures, so security over real estate is recorded on the title itself, where any title search will show it.

Notes by state

The process is national, the registries are local. For property-specific detail, see Sydney, Melbourne, Brisbane, Perth, Adelaide, Geelong and Wollongong and the Illawarra.

How much can you borrow against your property?

The amount turns on the property, what’s already owing against it, the term and how convincing the exit is. Lenders think in terms of loan-to-value ratio (LVR) — the loan divided by what the property is worth — but there is no single figure that applies to every deal. A strong exit and well-located security support more; an uncertain exit or harder-to-sell property supports less.

Illustrative example: A Newcastle electrical contractor owns a workshop worth about $1.5m with $300k still owing to a bank. He needs $500k in hand to buy materials for two large contracts and to clear an ATO debt. Illustrative: a private first mortgage of $900k, an LVR of 60%, pays out the bank, sets aside interest for 12 months and covers the assessment fee and legal costs, leaving about $515k for the business. The exit is a refinance to a bank once the contracts have paid and his accounts reflect the stronger year. Illustrative only, not a quote or lending policy.

Line	Illustrative figure
Gross first mortgage	$900,000
Less bank payout at settlement	−$300,000
Less 12-month interest allowance (illustrative, set per deal)	−$70,000
Less assessment fee and legal costs (illustrative)	−$15,000
Net funds to the business	$515,000

To test your own numbers before you talk to anyone, try the secured borrowing power calculator. When you’re ready for a real answer, start a 60-second enquiry.

Should you choose a 12 or a 24 month term?

Pick the term your exit needs, then add a little. A refinance that depends on lodging next year’s accounts, a development that has to be finished and sold, or a farm that needs two harvests points to 24 months. A sale already listed, a contract paying in a few months or an ATO refund on the way points to 12. A longer term can carry a larger interest allowance, which reduces the cash in hand, so don’t choose 24 months by default. The short-term first mortgage page walks through the choice.

What happens if the exit takes longer than planned?

Exits slip: a buyer’s finance wobbles, a bank asks for one more quarter of figures, a harvest comes in late. The worst response is silence until the expiry date. Raise it as soon as you can see the delay, with evidence of where the exit stands. Depending on the deal, options can include a term extension by agreement, a partial repayment from another source, or a change of plan such as selling a different asset. What applies if the loan isn’t repaid on time is spelt out in your Letter of Offer, so read that part with your solicitor before signing, not after.

What documents will you need?

• Photo ID for every borrower, director, guarantor and registered owner.
• The latest statement and, if refinancing, a formal payout figure for each existing loan.
• The latest council rates notice and any lease if the property is tenanted.
• ASIC extract, constitution or trust deed where an entity owns the property or borrows.
• A short note on the business purpose, with supporting documents.
• Evidence of the exit: a sale listing or contract, a bank’s conditional approval, a contract schedule or recent accounts.

Our guide to documents for a private mortgage explains each item.

What does a private first mortgage cost?

You won’t find a published price here, and that’s deliberate. Every deal is priced on its own security, LVR, term and exit, and the aim is the sharpest price your situation allows. What you can expect is clarity: the Letter of Offer sets out every cost before you sign.

The main items to understand are:

• Interest — and how it will be handled, whether prepaid at settlement or capitalised into the loan.
• Assessment fee — a small fee that varies with each loan and is shown on the Letter of Offer.
• Your own solicitor’s or conveyancer’s costs and the usual government registration charges.
• Any discharge costs your existing bank charges when it is paid out.
• No report fee, because there’s no formal valuation required.

For a plain-English walk through each line item, see private mortgage costs explained.

How quickly can a private first mortgage settle?

Funding is possible within 24–48 hours for loans up to $5m once documents are in, and smaller property-secured amounts from $20k to $250k can be possible the same day. The phrase that matters is “once documents are in”. The things that most often slow a deal are:

• an existing lender that takes days to issue a payout figure;
• a company or trust owner that hasn’t prepared the right resolutions;
• a co-owner who isn’t available to sign;
• an exit plan that hasn’t been thought through.

Having your exit worked out before you enquire saves the most time — our guide to the exit strategy for a short-term mortgage shows what a lender wants to see. For the full sequence from enquiry to funds, read how it works.

Situations we fund with private first mortgages

Bank pressure and refinancing

• Bank won’t renew your facility
• Refinance when the bank says no
• Refinance a loan in default
• Stop a mortgagee sale

Buying and settling property

• Buy commercial property fast
• Settle a property purchase on time

Selling and timing gaps

• Bridge until a property sells
• Buyer failed to settle
• Fund a value-add before sale

See if you qualify for a private first mortgage

Finding out where you stand costs you a minute and nothing else. There’s no credit check when you first enquire, and your details aren’t sent around to a list of lenders — a lending specialist reads your enquiry personally and comes back to you.

The more accurately you describe the property, who owns it and what’s currently owing against it, the more reliable the first answer will be, and the faster everything after it moves.

Check your eligibility now and get a straight answer on whether a private first mortgage fits your plan.

The lender that funds these loans, fundU, has its own page on fast first mortgages if you want to see the product from the lender’s side.