Quick ways to fund a fast settlement property

You've found a property that ticks every box, but the seller needs settlement in three weeks and your bank pre-approval takes six. This timing mismatch happens more often than most couples realise, particularly in Melbourne's inner and middle suburbs where vendors are downsizing or managing estate sales with fixed deadlines.

Private funding exists specifically for situations where timing matters more than securing the lowest rate. It's short term finance, typically arranged in days rather than weeks, that lets you settle quickly and then refinance to a traditional lender once the urgency has passed.

What private funding actually covers

Private funding is a loan from a non-bank lender, often backed by a family office or high net worth lender, designed for borrowers who need quick approval and settlement. The loan amount depends on the property's value and your exit plan, which is how you'll repay the loan within the agreed term, usually six to twelve months.

The key difference from bank lending is speed and flexibility. A private lender assesses the property's value and your ability to refinance or sell, not your tax returns from two years ago. If you're buying at auction or the vendor has set a tight settlement date due to their own circumstances, private funding can keep you in the deal.

How LVR and interest rates work with private loans

Private lenders typically lend up to 65% or 70% loan to value ratio, though some will stretch to 80% with alternative security like equity in another property. The lower the LVR, the lower the risk for the lender and the more favourable your loan interest rate.

Interest rates on private loans sit higher than bank rates, often between 8% and 14% depending on your LVR, the property type, and how clear your exit strategy is. Because these are short term loans, you're paying that rate for months, not decades. A $500,000 loan at 10% over six months costs roughly $25,000 in interest, but that's weighed against losing the property entirely.

Consider a couple who found a two-bedroom unit in Oakleigh South listed for a quick sale due to the vendor relocating interstate. They had $150,000 saved and a strong income, but their lender needed four weeks to finalise approval and the vendor wanted settlement in 15 days. They used a private loan at 70% LVR to settle on time, then refinanced to a bank six weeks later once their standard home loan was approved. The private loan interest rate was higher, but the total cost was under $6,000 and they secured a property in a tightly held pocket.

When private funding makes sense for first home buyers

Most first home buyers assume private loans are only for developers or investors, but they're increasingly used by couples who need to act quickly on the right property. You're a strong candidate if you have a deposit of at least 20% to 30%, a clear path to bank approval within a few months, and you've found a property where the vendor won't extend the settlement date.

Private funding also works when you're waiting on the sale of another asset, like an investment property or inheritance, and you need bridging finance to cover the gap. The loan term is short, the private loan application is minimal compared to a bank, and you're not locked into that higher rate for years.

If your income is harder to document because you've recently started a business or switched careers, a private lender may approve your loan based on property value and exit strategy while you build the employment history a bank requires. The fast approval timeline means you're not losing properties to other buyers who have their finance ready.

How the application and approval process works

A private loan application asks for proof of identity, evidence of your deposit, a contract of sale, and a clear exit plan. Most private lenders want to see that you'll refinance to a bank or sell the property within the agreed term, which is usually six to twelve months but can be as short as three.

Approval can happen in 24 to 48 hours if the property valuation is straightforward and your deposit is already in an Australian bank account. Settlement typically follows within five to ten business days, though some private lenders can fund in as little as 72 hours if the urgency is genuine.

You'll pay an establishment fee, usually 1% to 2% of the loan amount, plus valuation and legal costs. These private funding costs sit on top of the interest, so factor them into your decision. If the total cost of the private loan is $10,000 and losing the property means waiting another six months to find something comparable, the calculation becomes clear.

What your exit strategy needs to include

Every private lender will ask how you plan to repay the loan. The most common exit strategy is refinancing to a bank once you have unconditional approval and the property has settled. This works if your income and credit history support bank lending but you simply didn't have enough time to get through their process before settlement.

Another option is selling the property, though this is less common for first home buyers unless you're purchasing a property to renovate and flip. Some borrowers use the sale of another asset, like an investment property or shares, to repay the private loan within the funding term.

Your exit plan needs to be realistic. If you're self-employed and your income won't support a traditional home loan for another year, private funding isn't the right tool unless you're planning to sell or bring in a co-borrower. The private lender will assess whether your exit strategy is achievable, and if it's not, they'll decline the application even if the property value supports the loan amount.

How FinancePath structures private funding for quick settlements

We arrange private loans through a panel of non-bank and specialist lenders who fund property purchases across Australia. Our role is to match your situation with the lender most likely to approve quickly and at terms that make sense for your exit timeline.

Before recommending private funding, we'll confirm whether extending the settlement date or accessing low deposit home loans with a bank is possible. If private lending is the right path, we'll walk you through calculating private loan costs, the funding term, and how to refinance once the urgency has passed. We also help coordinate settlement so the funds arrive on time, which matters when you're working to a fixed deadline.

Call one of our team or book an appointment at a time that works for you. If you're facing a short settlement and need clarity on whether private funding fits your situation, we'll give you a direct answer and show you the numbers before you commit.

Frequently Asked Questions