How private lending rates are set (and why nobody serious publishes one)

Searchers want a number. Lenders that publish one are quoting their best case for their strongest deal, and the rate on your term sheet will be whatever your deal actually warrants. We do not publish rates — as a broker we see pricing from across a panel and it is set per transaction — but we can explain exactly what moves it. If you understand the drivers, you can improve your position before the deal goes to a funder.

Why there is no rate card

Bank pricing is standardised because bank risk is standardised: policy decides who qualifies and the price is the same for everyone who does. Private lenders accept deals banks will not, so each one is priced on its own risk. Two loans of the same size on the same day can carry materially different pricing because one is a 50% first mortgage over a CBD commercial unit with an exchanged sale contract and the other is a 70% second mortgage over a regional site with a refinance exit. A published “from” rate tells you nothing about which of those you are.

The eight drivers

• —Security type and location. Metro residential investment and commercial property price best; industrial next; land, rural and specialised assets (hospitality freeholds, childcare) carry a premium because they are harder to sell quickly.
• —Loan-to-value ratio. The single biggest lever. A loan at 50% LVR is a different risk from one at 75%, and funders price the bands accordingly.
• —First or second position. A second mortgage ranks behind another lender and prices higher for it, even at the same combined LVR.
• —Strength of the exit. An exchanged sale contract or a bank pre-approval reduces the lender's risk of being stuck at maturity, and the pricing reflects it. See how lenders assess an exit.
• —Term. Shorter is not always cheaper. Very short terms carry fixed costs over fewer months; very long terms carry more uncertainty. Six to twelve months is the sweet spot for most funders.
• —Interest structure. Capitalised interest (no payments during the term) is priced slightly differently from serviced interest, and prepaid interest differently again.
• —Loan size. Funders have sweet spots. A deal at the bottom of a lender's range carries fixed costs that make it relatively expensive; a deal at the top may need a syndicate.
• —The file. Clean title, a current valuation, entity documents in order and a credible borrower all reduce the lender's work and risk. Credit events do not usually decide the outcome, but they are priced in.

Rate is not the whole cost

A lower headline rate with a larger establishment fee, a longer minimum term or a steep exit fee can cost more than a higher rate with none of those. The term sheet sets out all of it: rate, how interest is charged, lender fees, the minimum interest period and what happens at maturity. The fee categories — brokerage, lender establishment or commitment, valuation, legal, registration — are explained on our fees page.

How a broker gets better pricing

By knowing which funder wants which deal this month, by packaging the file so the lender's credit team can say yes without a second round of questions, and by running two or three funders against each other where the deal justifies it. Private credit pricing is negotiated, not posted, and the negotiation is easier with a complete package than with a one-line email.

How to improve your own position

• —Borrow less than the maximum LVR if you can; the step from 65% to 75% is expensive.
• —Bring the exit evidence to the first conversation.
• —Have a recent valuation if one exists, and the entity and trust documents ready.
• —Disclose the awkward facts up front. Surprises in due diligence are priced in twice.
• —Ask for the all-in cost over the term, not just the rate.

Indicative pricing for a specific deal is typically within 24–48 hours away. Start an enquiry and we will tell you where it is likely to land and why.