What Private Lenders Look for When Assessing a Deal

What private lenders look for when assessing a deal

Most borrowers who approach a private lender have already been through the bank process. They know what banks look for — income verification, credit history, serviceability ratios. Private lending works differently. Understanding what actually matters to a private lender can help you present your scenario clearly and get a faster, more accurate response.

The property comes first

Private lenders are asset-based lenders. That means the property securing the loan is the primary consideration — not your income or employment history. The key questions are whether the property is in a location with genuine market demand, whether the value is clear and supportable, and whether the security is enforceable.

Most private lenders focus on metropolitan and major regional areas where property values are stable and enforceable security is straightforward. Rural or remote properties are harder to lend against because the market for them is thinner and values are less predictable.

The loan to value ratio

LVR — the loan amount as a percentage of the property value — is one of the most important numbers in any private lending assessment. The lower the LVR, the more equity sits between the lender and any potential loss, and the more comfortable a lender can be with the transaction.

Most private lenders in Australia cap residential lending at between 65% and 80% LVR. For second mortgages, the LVR is calculated across the combined first and second mortgage debt — not just the new loan. At Maranta Capital we lend up to 80% LVR on residential property and up to 75% on commercial property.

The exit strategy is non-negotiable

This is the single most important factor in any private lending decision — and the one borrowers most often underestimate. A private loan is short term by nature, typically 6 to 12 months. The lender needs to know with confidence how they are going to be repaid at the end of that term.

A strong exit strategy is specific, realistic, and documented. Examples include a confirmed property sale with an executed contract, a refinance approval already in progress with a mainstream lender, or a business liquidity event with a clear and credible timeline.

A weak exit strategy is vague — "we'll refinance eventually" or "the property will sell." Private lenders who approve deals without a credible exit are not doing their borrowers any favours.

The borrower's experience and commercial understanding

Private lenders don't require payslips or tax returns in most cases. But they do pay attention to whether the borrower understands what they're doing. An experienced property investor or business owner who can clearly articulate their situation, the security, and their exit plan is a very different proposition to someone who can't explain the basics of their own deal.

This doesn't mean private lending is only for sophisticated borrowers. It means that clear, organised, commercially aware borrowers get faster and better outcomes.

The existing debt structure

For second mortgages specifically, private lenders look carefully at what's already secured against the property. How much is owed on the first mortgage? What are the terms? Is the first mortgage lender likely to cause any complications? The combined debt position needs to make sense at a conservative property valuation before a second mortgage lender will proceed.

What private lenders don't focus on

It's worth being clear about what most private lenders — including Maranta — are not primarily focused on. Income and employment history matter far less than they do to a bank. Credit history is considered but is not necessarily disqualifying. The purpose of the funds is less important than the security position and the exit strategy.

This is why private lending exists — to serve scenarios that don't fit the bank's model, assessed on the merits of the deal rather than a credit scoring formula.

How to present your scenario

The fastest way to get a useful response from a private lender is to lead with the property, the LVR, and the exit strategy. A brief overview covering property location and value, existing debt, amount needed, loan purpose, and repayment plan will get you a clear answer far faster than a lengthy application with incomplete information.

At Maranta Capital we assess every scenario directly and respond within 24 hours. There's no obligation — just a straight answer on whether we can help.