Private First Mortgages are typically loans secured by a first-ranking mortgage over real property, provided by a private lender rather than a major bank.
A Private First Mortgage can be useful when a borrower needs fast funding, flexible servicing criteria, or a loan that doesn’t fit traditional bank policy.
Key considerations include:
- Loan-to-value ratio (LVR): Private lenders often focus heavily on the property’s value and exit strategy.
- Interest rate: usually higher than mainstream bank lending.
- Fees: Establishment, valuation, legal, and potentially exit fees can materially increase the cost.
- Term: often short-term, such as 6–24 months.
- Security: the lender generally takes a first mortgage, giving it priority over subsequent secured creditors if the borrower defaults.
- Exit strategy: lenders will usually want a credible plan for repayment—such as refinancing, sale of the property, or completion of a development.