Short-term property finance is a loan secured by property for a set period, usually a few months to two years, repaid by a sale or a refinance rather than over decades.
Short-term property finance makes sense when you need money for months rather than decades, such as settling before a sale or buying quickly with a clear exit.
It costs more than a bank loan: a higher rate, establishment, legal and valuation fees, and a firm end date, often two years at most.
Part of the complex lending guide.
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For upgraders and investors, how much of your home could work as a deposit.
That usable equity could work as a deposit on an investment property or renovation, structured so your properties aren’t tied together unnecessarily.
Usable equity assumes lending to 80% of your home’s value against your current loan. Lender policy and serviceability decide the real figure.
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Short-term and private loans cost noticeably more than bank home loans. Expect a higher interest rate, an establishment fee, legal and valuation costs, and sometimes a line fee. Any fee paid to a broker must be set out in writing before you agree.
Interest is often prepaid from the loan or added to the balance, so the amount you receive can be less than the amount you owe. Compare the total cost over the time you expect to need the money, not the rate alone.
Every short-term loan ends with a lump-sum repayment. The usual exits are a sale at a realistic price and time frame, or a refinance to a bank or non-bank lender you are likely to qualify for.
Default rates and extension fees on a loan that runs past its term can be steep, so a second plan matters.
If the exit depends on things outside your control, such as a council approval or a buyer’s finance, allow extra time. Buying to renovate and resell is covered in house flipping finance.
Some short-term loans are secured by a second mortgage behind an existing bank loan, or by a caveat over the property. Your first lender may need to consent to a second mortgage, and caveat loans usually cost more because the security is weaker.
Ask exactly what security the lender takes, what happens on default and what the discharge will cost.
A loan secured by property for a short, fixed period, usually from a few months to two years, repaid in one amount by a sale or a refinance. Bridging loans, caveat loans, land loans before construction and private business loans secured by property are all forms of it.
Partly: loans for a home you live in, or to buy or improve residential investment property, are regulated consumer credit, while loans for business purposes generally are not.
Loans predominantly for business purposes generally are not, which is why many private lenders focus on them. That makes reading the contract, the fees and the default terms all the more important.
Often faster than a bank, sometimes within one to two weeks once the valuation and legal documents are done, because the lender assesses the property and the exit rather than a full income file. Speed still depends on the valuation, the title and your solicitor.
Usually a lower share of the property value than a bank would lend, and less again on vacant land or specialised property. The limit depends on the lender, the security and how convincing the exit is.
Sometimes, if the property has enough equity and the exit is realistic. But a decline is worth understanding first: if another bank or a non-bank lender would approve a standard loan, that is usually far cheaper. See declined by the bank.
Buying before you sell? Our guide to bridging loans explains the standard bank option, which usually costs less.
Charles can check first whether a bank or non-bank loan could do the job for less, and if private finance is the right tool, what the exit looks like.
Prefer a callback?Charles calls back within one business day. No documents needed yet.
General information only, not credit, legal or tax advice. Short-term and private lending terms, fees and lender appetite vary widely and change over time. Any loan is subject to the lender’s assessment, and costs are confirmed in writing before you proceed.
