The minutes of the RBA’s August meeting landed this week, and they read like a teaser trailer, hinting at more good news to come.
Having already trimmed the cash rate to 3.6%, the Board minutes left the door wide open for further cuts before the year is out with
Governor Michele Bullock struck an upbeat tone, pointing to cooling inflation and steady jobs data as the perfect backdrop for a softer rate environment.
Unfortunately, since they met earlier in the month, the ABS has released the latest inflation figures for the year to July, which didn’t make for very good reading, and may pour cold water over the RBA’s earlier sentiment.
In this week’s newsletter, we take a look at private mortgage fund loans. I’ve also a flyer which illustrates how borrowing capacity can vary from lender to lender.
Private mortgage funds aren’t just investment products, they also act as an alternative lending channel for borrowers who can’t secure finance from the banks. Backed by pooled investor money, these funds provide short-term, property-secured loans that are faster and more flexible than the majors.
What types of loans do they offer?
- Bridging loans – to cover the gap between buying and selling property.
- Construction and development finance – where banks want higher presales or won’t fund smaller projects.
- Non-conforming or credit-impaired loans – for borrowers with irregular income or past credit issues.
- Commercial property loans – structured more flexibly than traditional business lending.
Why borrow from them?
The appeal is speed and flexibility. Where a bank might take months, or decline outright, a private fund can settle in days. They look at the deal holistically, focusing on the property security rather than just the borrower’s financial history. For developers or business owners facing time-sensitive opportunities, that agility can be invaluable.
The risks (and why they’re a last resort)
- High cost – interest rates and fees are much steeper than banks.
- Short terms – loans often run 6–24 months, so refinancing risk is high.
- Collateral pressure – default can quickly lead to repossession or forced sale.
- Fewer safeguards – unlike banks, private funds may not offer hardship provisions or consumer-friendly policies.
The bottom line
Private mortgage funds can be a lifeline for borrowers shut out of traditional finance—but they are not a first choice. The higher costs and risks mean they should generally only be considered as a last-resort, stop-gap solution, used strategically while working toward longer-term bank funding.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
