Solutions
Refinancing an expiring private loan or caveat loan
A private loan is written for a fixed term with a fixed exit. When the exit slips — the bank is slower than hoped, the sale hasn’t happened, the project ran long — the facility matures anyway. Refinancing into a new registered mortgage with a realistic term is usually cleaner and cheaper than drifting into default interest.
Why private loans don't simply extend
The lender priced the loan for a term and committed capital for that term. At maturity the money is due. Some lenders will extend for a fee if the exit is close; many will not, or will only do so at default pricing. Letting a facility expire without a plan invites default interest, enforcement costs and, in the worst case, the lender taking possession of the security. The time to act is six to eight weeks before maturity, not the week of.
The options, roughly in order of cost
- Refinance to a bank or non-bank term lender. The intended exit. If it is genuinely weeks away, a short extension from the incumbent lender may be the right answer.
- A new private first mortgage. Pays out the maturing facility in full and resets the term — typically 6–12 months — against a fresh exit plan. Where the incumbent has issued a payout figure, this settles like any other first mortgage.
- Refinance a caveat loan into a registered second mortgage. Caveat loans are fast to lodge and expensive to hold. Replacing one with a registered second behind the bank first, with the bank's consent, puts the facility on properly documented footing and usually improves the terms. See second mortgage versus caveat loan.
- Sell the security. Sometimes the honest answer. A new private facility that buys time for an orderly sale rather than a forced one can still be worth arranging.
What the incoming lender assesses
- Why the original exit slipped, and why the new one is different. This is the whole credit question.
- Conduct on the maturing loan — interest paid or capitalised as agreed, no enforcement on foot.
- A current valuation and the resulting LVR, typically to around 75% gross.
- The payout figure from the incumbent lender, with any default interest or exit fees itemised.
Distressed timing
Where the facility has already matured and the lender is charging default interest, speed matters more than price. A clean refinance settles in 5–10 business days from the term sheet; we have the incumbent's payout figure and the valuation ordered on day one so nothing waits. We do not arrange finance to rescue an individual's home from a mortgagee; the borrower must be an entity and the security an investment or commercial property.
The products behind it
First Mortgage Loans
Registered first mortgage over residential investment, commercial, industrial, rural or mixed-use property.
MoreSecond Mortgage Loans
Sit behind a major-bank or other priority lender. Raise capital without disturbing an existing first.
MoreFrequently asked questions
- Can a private loan be refinanced with another private lender?
- Yes. It is common, particularly where the original exit was a bank refinance that has taken longer than expected. The new lender assesses the security, the conduct on the existing loan and the strength of the new exit.
- Can I refinance a caveat loan?
- Yes. A caveat loan can be replaced by a registered second mortgage behind the existing first lender (with its consent) or by a new first mortgage that pays out both. We do not arrange caveat-only loans, but we do refinance out of them.
- When should I start?
- Six to eight weeks before maturity. That leaves time for a valuation, first-mortgagee consent if a second is involved, and documentation without paying default interest while it happens.
- What if the lender has already started enforcement?
- Refinancing is still possible if the numbers work, but the timeline is set by the enforcement process rather than by us. Get a payout figure and legal advice immediately, then contact us with both.
Related reading
Important — Business Purpose Lending Only
IMPORTANT — BUSINESS PURPOSE LENDING ONLY. Andorra Capital Solutions Pty Ltd (ACN 675 464 623 / ABN 32 675 464 623) is a commercial finance broker and introducer. We arrange property-secured business-purpose loans between Australian corporate borrowers and a panel of non-bank lenders and private investors. We do not provide credit ourselves. We do not arrange consumer credit and we do not arrange credit regulated by the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) or the National Credit Code. We are not an Australian Credit Licensee. Every loan arranged through us is either to a borrower that is not a natural person (outside the National Credit Code under section 5(1)) or for purposes that are wholly or predominantly business or investment purposes (outside under section 6(1)), or both. All borrowers are required to execute a Business Purpose Declaration and to evidence the true business purpose of the funds. No part of any loan arranged through us may be applied for personal, domestic or household purposes. If a borrower applies any part of the funds for a purpose to which the NCCP Act would apply, the borrower does so in breach of the loan agreement and indemnifies the lender against any resulting loss, claim or cost. The information on this website is general in nature, does not constitute financial, legal or taxation advice, and does not take into account your objectives, financial situation or needs. No interest rates, fees or other commercial terms are advertised on this website; pricing is determined by the relevant panel lender or private investor and is disclosed to the borrower as part of indicative terms. All loans are subject to credit assessment, satisfactory security, valuation, and execution of formal loan documentation by the relevant lender. For consumer credit (regulated under the NCCP Act), contact a licensed credit provider.