Who Are Private Mortgage Lenders for Non-Traditional Incomes?
Private mortgage lenders, low doc mortgage lenders and guarantor mortgage lenders can offer alternative lending options for borrowers with non-traditional incomes in Australia. Self-employed workers, freelancers and people with irregular income may find it difficult to meet the strict documentation requirements of traditional banks, making these alternative lending options relevant when a conventional bank says no.
What Are Private Lenders?
Private lenders supply funds from wealthy individuals, private equity firms or private organisations, rather than a mainstream bank. They're not commonly available to the public and are usually accessed through connected mortgage lenders brokers.
Private lenders can include:
- Wealthy individuals
- Private money lending companies
- Private equity firms
- Solicitors' funds
- Foreign capital-raising entities
Borrowers turn to private lenders when they fail to satisfy a traditional lender's criteria. Private lenders tend to be more lenient in assessment, and most of their loans are non-coded, sitting outside the National Consumer Credit Protection Act (NCCP).
How Private Lenders Assess Loans
Private lenders are generally asset-style lenders, lending against property or asset value, typically between 50% and 75% LVR. Alongside standard mortgages, they also offer no doc and low doc loans, equity release and working capital loans, business, commercial and construction loans, and short-term loans.
Accepted security can include residential, commercial and industrial property, vacant land, construction sites, luxury goods, business machinery and stock, outstanding invoices, and term deposits. Because of the added risk, private mortgage lenders typically charge more than a bank loan across interest, application, legal, discharge and default fees.
Low Doc Mortgage Lenders
Low doc loans suit borrowers who can't provide the usual income documentation, such as tax returns or payslips. Instead, low doc mortgage lenders assess repayment ability using BAS, bank statements or an accountant's letter.
Key benefits:
- Flexibility: more ways to prove fluctuating or multi-source income
- Speed: fewer documents, faster approval
- Personalised service: solutions tailored to your situation
This suits the self-employed, freelancers and anyone with a complex income structure.
Guarantor Mortgage Lenders
A guarantor home loan lets a family member guarantee an applicant's loan by providing security, helping the borrower avoid lenders mortgage insurance (LMI) and enter the market without a large deposit. The maximum LVR for a guarantor home loan in Australia is 110%, which can also cover costs like stamp duty.
Two forms exist:
- Service guarantee: a family member guarantees repayments and is named on the title.
- Security guarantee: the guarantor uses equity, typically 20-25% of the purchase price, to support the deposit and avoid LMI.
A guarantee can be removed once there's enough equity, once LMI is paid to bring the LVR under 80%, when the property is sold, or once the loan is paid down.
Quick Comparison
Feature | Private Lenders | Low Doc Lenders | Guarantor Lenders |
Best suited for | Borrowers outside traditional criteria | Self-employed, complex income | Buyers without a full deposit |
Income check | Assessed on asset value | BAS, bank statements, accountant's letter | Applicant's income plus guarantor support |
Typical max LVR | 50-75% | Not stated on source | Up to 110% |
Regulation | Mostly non-coded, outside NCCP | Standard regulated channel | Standard regulated channel |
Cost profile | Higher fees than bank loans | Comparable to standard low doc products | No LMI when guarantor covers shortfall |
Working with a Mortgage Broker
A mortgage lenders broker with access to a wide panel, including private, low-doc and guarantor lenders, can match your circumstances to the right fit. Mortgage Providers, established in 2003 and MFAA accredited, works with over 40 lenders and more than 50 private lending bodies, following a three-step process:
- Consultation: understanding your financial goals
- Comparison: reviewing options across the lender panel
- Application & Approval: managing the process through to approval
Get a Free Mortgage Assessment
Need a lending option for non-traditional income? Contact Mortgage Providers to explore private, low doc and guarantor home loan options.
FAQs
What are private mortgage lenders?
Private mortgage lenders are funded by sources such as wealthy individuals, private equity firms and solicitors' funds and are typically accessed through a broker.
Who benefits from low-doc home loans?
Self-employed borrowers, freelancers and anyone with complex income who can't provide traditional documentation.
What's the maximum LVR for a guarantor home loan?
110% in Australia, which can also help cover costs such as stamp duty.
Are private lender loans regulated like bank loans?
Most sit outside the NCCP, unlike standard bank loans.
How much security does a guarantor provide?
Typically 20-25% of the purchase price, less if the applicant also contributes a part deposit.
How many lenders do mortgage providers work with?
Over 40 lenders for standard home loans, plus more than 50 private lending bodies.