How Short-Term Private Loans Work | George Boulos, Gold Coast

On the Gold Coast, good property opportunities don't always wait for a bank to say yes. A settlement date gets close, an auction comes up, or a development site needs a deposit this week, not next month. That's where short-term private loans come in. I'm George Boulos, and I founded Boleyn Capital on the Gold Coast in 2010 to provide this kind of funding. In this article I want to explain plainly how private loans work, when investors use them, what they cost, and what to think about before you take one on.

What is a short-term private loan?

A short-term private loan is a loan from a non-bank lender, secured by a registered mortgage over property. It's designed to be in place for months rather than years. At Boleyn Capital, for example, loans run from 1 to 12 months, range from $50,000 to $3,000,000, and can be secured by a first or second mortgage.

The key difference from a home loan is purpose. These loans are for business or investment purposes only. They aren't for buying the family home or for personal spending.

When do property investors use them?

In my experience, private loans are usually about timing. Common situations include:

Settlement gaps. You've bought a property, but the sale of another one, or your bank's approval, won't be ready in time for settlement.
Bridging. You need funds to buy the next property before the current one sells.
Auctions. Auction contracts are generally unconditional, so you need certainty of funds on the day.
Development deposits. A site or option needs a deposit while longer-term development finance is still being arranged.
Urgent opportunities. A below-market purchase or a business need that won't wait for a standard bank process.

In each case, the private loan is a bridge to something else: a sale, a refinance, or the completion of a project.

How private loans differ from bank loans

Banks are built for long-term lending with standardised criteria. They look closely at income, serviceability and credit history, and their processes take time. That suits most borrowers most of the time.

A private lender looks at the deal itself. The main questions are what the property is worth, how much is being borrowed against it, and how the loan will be repaid. That focus, and fewer layers of approval, is why a private loan can move much faster. At Boleyn Capital, settlement is typically 24 to 72 hours once a loan is approved and the documents are in order. It's also why private lenders can help borrowers who don't fit a bank's boxes, such as self-employed investors or those with complex structures.

The costs and risks, honestly

Private loans cost more than bank loans. Interest rates are higher, and there are usually establishment and legal costs as well. You're paying for speed, flexibility and a short commitment, so a private loan only makes sense when the opportunity is worth more than the extra cost.

The biggest risk is not having a realistic way out. A short-term loan has to be repaid at the end of its term, so before you borrow you need a clear exit strategy, such as:

the sale of a property,
a refinance with a bank or other lender, or
the completion and sale of a development.

Build in some buffer. Sales can take longer than expected, and bank approvals can stall. If your exit relies on everything going perfectly, it's worth rethinking the plan. Also check the fine print on early repayment. Boleyn Capital, for instance, doesn't charge exit fees or early repayment penalties, but that isn't true of every lender.

What a private lender looks at

Every lender has its own criteria, but most focus on three things:

Security. The property being offered: its type, location, condition and value. Lenders normally rely on an independent valuation.
LVR (loan-to-value ratio). How much you're borrowing compared with the property's value. Lower LVRs mean less risk for everyone. At Boleyn Capital the maximum is 75%.
Exit. How and when the loan will be repaid. A credible, documented exit is often the most important part of an application.

A quick checklist before you apply

Know exactly what the funds are for, and confirm it's a business or investment purpose.
Work out how much you need and for how long, then add a buffer.
Have property details ready, including the address, ownership and any existing mortgages.
Write down your exit strategy, with evidence where you can (for example, a sale contract or a refinance pre-approval).
Ask for all costs in writing: interest, establishment fees, legal fees and any exit or early repayment fees.
Get advice from your accountant, solicitor or finance broker before signing.

Talk it through

Used well, a short-term private loan is a practical tool that lets Gold Coast investors act on time-sensitive opportunities. Used without a clear exit, it can become an expensive problem. The difference is planning.

If you have a scenario you'd like to talk through, you can find Boleyn Capital's lending guidelines at boleyncapital.com.au, or get in touch with me directly.

This article is general information only and isn't financial, legal or tax advice. Boleyn Capital loans are for business or investment purposes only and aren't available for personal, domestic or household purposes. All loans are subject to assessment. Get independent professional advice for your circumstances.