Refinancing a private lender means replacing short term private, caveat or second mortgage funding with a longer term facility from a mainstream or specialist lender before the private loan expires. Private money is priced and structured for a short window, so the exit is the product. Lenders assessing the refinance look hardest at three things: recent conduct on the private loan, whether tax and financial lodgements are current, and whether a valuation supports the debt. NIK Finance compares 130+ lenders, charges a $0 broker fee, and will tell you if the numbers do not work.
A private loan is not a mispriced bank loan. It is a different product solving a different problem: speed and certainty over a defined, short window, with the lender taking security over property and relying on an exit event rather than on serviceability. That is why it is priced the way it is, and it is also why the structure punishes delay so hard. A bank loan that runs a month over term is a phone call. A private loan that runs a month over term can trigger a rollover on new terms, default interest, capitalised costs and, if the lender loses confidence, enforcement. None of that is the private lender behaving badly. It is the product working exactly as written. The mistake borrowers make is treating the expiry date as a soft target.
The lender agrees to extend, usually on repriced terms with fresh fees. Buys time. Costs money. Reads on a future credit file as an exit that did not land the first time.
A higher rate applying from the default event, often with costs capitalised into the balance. The balance starts moving away from you, which can push the loan past what a refinancing lender will advance against the security.
Depending on the security, this can mean exercising power of sale under a mortgage or steps to realise the caveated interest. Once it starts, your refinancing options narrow sharply and your timeline is no longer yours.
The practical rule: begin the refinance conversation 8 to 12 weeks before expiry. Mainstream and specialist assessments, valuations, and discharge coordination all take longer than borrowers expect, and the last two weeks are the ones you cannot compress.
When a lender assesses a private loan refinance, they are not really assessing the private loan. They are assessing whether the reason you took it has resolved. There are three exits that credit teams recognise, and one of them is not on the list.
| Exit | What it looks like | What the lender wants to see | Where it fails |
|---|---|---|---|
| Refinance to a mainstream or specialist lender | A new term facility repays the private loan in full at settlement | Serviceability, current lodgements, a valuation that supports the debt, clean recent conduct | Valuation comes in short, or lodgements are behind so income cannot be evidenced |
| Sale of an asset | A property or business asset sells and the proceeds clear the debt | An executed contract, a realistic settlement date, and a sale price with headroom over the payout figure | Sale falls through or settles late, and the private loan expires in the gap |
| A business event | A receivable lands, a contract completes, a capital raise or an insurance or settlement payment arrives | Documentary evidence of the event and its timing, not a verbal expectation | The event is real but the date is not, and dates are the whole game here |
| Refinancing private with private | A new private loan repays the old one | Nothing. This is not an exit | Costs compound, the balance grows, equity erodes, and each round narrows the options for the next |
That last row is on the table because it is the most common thing that happens, not because it is a strategy. There are narrow cases where a second private facility is genuinely a bridge, for example where a sale contract is exchanged and settlement is a known date just past the current expiry. Outside that, a private to private refinance is usually the moment the position stops being recoverable, because the balance is now growing faster than the equity behind it. We will tell you if we think you are at that point.
Mainstream and specialist credit teams are not squeamish about private lending in the abstract. What they are assessing is whether the private loan was a considered bridge or a symptom. The difference is almost entirely in the evidence you bring.
Payments on the private facility made on time, and no default notice issued. Recent conduct outweighs older history in almost every credit policy.
BAS and tax returns up to date. For business borrowers this is the single most common blocker, because an assessor cannot verify income from returns that do not exist yet. If the private loan funded a tax debt, paying an ATO debt out is the context the assessor will ask about.
Not the valuation you have from two years ago, and not the agent's appraisal. The lender's panel valuer, on their instruction.
In writing, from you or your accountant, dated and specific. "We settled a purchase in nine days because the vendor would not extend" is a fine reason. "Cash flow" is not a reason, it is a description.
If the private loan funded a tax debt, show the ATO balance cleared. If it funded a shortfall, show the shortfall gone. Assessors are looking for the pattern to have stopped.
Private lender payout figures are quoted to a specific date and change after it. Settlement has to be booked inside that window.
This is where these deals actually fall over, and it is almost never the credit decision. It is the mechanics. A new first mortgage cannot be registered while a competing interest sits on the title, so every caveat and every second mortgage in the chain has to be dealt with, in the right order, on the right day, with money moving between parties who do not fully trust each other.
If the private funding is business purpose, it may sit outside the National Credit Code, which changes the protections that apply. ASIC has taken action against arrangements it alleged were structured to avoid the Code. Understand which regime your existing loan sits under before you sign anything new.
A private loan on a credit file or in a liabilities schedule is a signal, and assessors read signals. The signal is not automatically negative. It says the borrower needed speed or flexibility that a bank could not deliver. Whether that reads as competence or as distress depends almost entirely on how the file is presented, which is a large part of what a broker is actually for.
A short, dated explanation. A clear commercial reason. Evidence the transaction it funded completed. On time payments. An exit that was planned from the start and is now executing.
No documented reason. Multiple private facilities, or a private loan that has already been rolled. Lodgements behind. Payments late. A caveat lodged by a party unrelated to the original funding purpose.
Put the explanation in the submission rather than leaving the assessor to guess, sequence the application to the right lender tier first, and coordinate the payout, discharge and caveat withdrawal so settlement books inside the payout window.
Documents to have ready before the first call: the current private loan agreement, a written payout figure with its expiry date, a current title search showing every registered dealing and caveat, copies of any caveat and any second mortgage documents, evidence of the exit (contract of sale, signed agreement, ATO statement showing the debt cleared), current BAS and tax lodgement status, and the last two years of financials.
Often yes, and it is the most common exit. A mainstream or specialist lender repays the private loan in full at settlement. Approval depends on serviceability, current lodgements, a valuation supporting the debt, and clean recent conduct on the private facility. No broker can guarantee an outcome.
Allow eight to twelve weeks. Credit assessment, a panel valuation, and coordinating the payout figure, mortgage discharge and caveat withdrawal all take time, and the discharge coordination is usually the slowest part. Starting two weeks before expiry is how borrowers end up rolling into default interest instead.
It is a signal rather than a mark against you. Assessors read a private facility as evidence you needed speed a bank could not provide, which can be entirely reasonable. What damages the file is a missed payment, a default notice, a facility that has already been rolled, or unexplained multiple private loans.
A caveat records a claimed interest on the title and blocks new dealings, but it is not itself a registered mortgage. A second mortgage is registered behind the first and carries its own rights, usually governed by a deed of priority. Both must be dealt with before a new first mortgage can register.
Usually no. Costs compound, the balance grows against static security, and each round narrows the options for the next. The narrow exception is a genuine bridge to a dated event, such as an exchanged contract settling shortly after expiry. Outside that, it is generally where positions become unrecoverable.
Bring the current loan agreement, a written payout figure valid to a date, a title search showing any caveat or second mortgage, and documented evidence of your exit. Without the exit evidence the file does not get assessed, because the exit is the thing the incoming lender is actually underwriting.
The full refinance range, including standard bank to bank moves once you are back in mainstream territory.
Term and working capital facilities where the exit is a business event rather than a property sale.
If the private loan funded a tax debt, this is the context the assessor will ask about.
A free read on your borrowing position before you approach a lender, with no impact on your credit file.
The last two weeks before expiry are the ones you cannot compress. Call 1300 304 381 to map the exit, or run a free Kreddi Score across credit health, debt efficiency, asset strength, cash flow and borrowing power. No impact on your credit file.
Sources
NIK Finance Pty Ltd (ACN 685 393 917) is a Credit Representative (567387) of Finsure Finance & Insurance Pty Ltd (Australian Credit Licence 384704). This page is general information only and does not constitute financial advice. Consider your personal circumstances and speak with a licensed broker before applying for credit.