Private Lending Explained
What is private lending?
The plain-English answer, no bank jargon, no broker-speak. What it actually is, how it works, and when it beats waiting on a bank.
The Short Answer
Borrowing from a lender, not a bank.
Private lending is finance from a non-bank lender, usually secured against property or another valuable asset, rather than a traditional bank. The lender uses its own capital and makes its own call on a deal, instead of running it through a bank’s standard credit policy and a committee you’ll never meet.
You’ll see it called a few different things, private money lending, private credit lending, or direct lending private credit, but they’re all describing the same basic idea: a lender, funded by private capital instead of bank deposits, assessing your deal directly and deciding for itself.
Private Lending vs a Bank
What actually changes when the lender isn’t a bank.
Private lending trades a bank’s low rate and long timeline for speed and flexibility, not a free upgrade in every column. Here’s the honest comparison, including where a bank still wins.
Bank
Private lender
Decision based mainly on
Your credit score, income and serviceability
The value and quality of the property or asset offered as security
Typical loan term
Long-term, often 20 to 30 years
Short-term, commonly 1 to 24 months
Interest rate
Lower, reflecting a longer term and lower risk to the lender
Higher, reflecting a shorter term and a faster, more flexible assessment
Documentation
Extensive: payslips, tax returns, bank statements
Lighter, focused on the asset, the equity position and the exit plan
Time to an indicative answer
Can take weeks, moving through a credit committee
Often just days, since one lender assesses the deal directly
Best suited to
Standard, straightforward lending needs
Time-sensitive, complex or non-standard deals a bank's policy won't stretch to
Private Mortgage Lending
What is private mortgage lending?
Private mortgage lending is private lending secured by a registered mortgage over real property, the exact same legal security a bank takes. The difference isn’t the security, it’s who’s behind it and how the deal gets assessed: a private lender looks at the property, the equity position and the plan, not a standardised policy built for the average borrower.
Private Lending in Real Estate
What is private lending in real estate?
In real estate, private lending means borrowing against property you already own or are buying, residential, commercial, industrial or land, from a private lender instead of a bank. It shows up in a few common situations:
- 01Bridging finance between buying a new property and settling the sale of an old one.
- 02Releasing equity from a property you already own to fund a purchase, a business, or a shortfall.
- 03Refinancing when an existing lender has called a loan or a facility is about to expire.
- 04SMSF commercial property and other deals that don’t fit a standard bank product.
The loan-to-value ratio (LVR), how much you’re borrowing against how much the security is worth, is usually the first number a private lender looks at, well before your credit score.
The Terminology
Private money lending, private credit, direct lending: same idea, different names.
These terms overlap so much they’re often used interchangeably, but each one emphasises a slightly different angle on the same activity:
Private money lending
Emphasises the source: it’s private money, not a bank’s deposits, funding the loan.
Private credit
The institutional name for the whole asset class private lending sits inside, mostly used by investors and fund managers.
Direct lending
Emphasises the borrower’s experience: dealing straight with the lender that funds the deal, with no broker or lead-generation queue in between.
Rave is all three at once: a private lender, funding deals with private credit, that you deal with directly. Want the full process from enquiry to settlement? See how it works.
Private lending is borrowing money from a non-bank lender, usually secured against property or another asset, rather than from a bank or through a broker shopping your deal around multiple lenders. The private lender uses its own capital and makes its own decision, so it can move faster and consider deals a bank's standard checklist would reject.
Got a deal a bank would take weeks on?
Tell us the property and the plan. A real lender reads it, not a lead-routing algorithm.