“Private lender” can sound like something from the back pages of a newspaper. In practice, private lending in New Zealand is a well-established part of the property-secured market: individuals, family offices and pooled funds lend their own capital against registered mortgages, usually through lawyers and specialist intermediaries. For a business owner who owns property, it’s often the fastest route to a meaningful sum.
Who are private lenders?
They’re investors who want a secured return and are willing to make a judgement call a bank can’t. Some lend as individuals; many invest through managed funds or syndicates. What unites them is that their loans are secured by a registered mortgage over land, the same legal instrument your bank uses, recorded on the title through Land Information New Zealand.
How is a private business loan assessed?
Private lenders simplify the question. Instead of modelling your next five years, they ask:
- What’s the property worth, and how much equity is there? They’ll look at existing mortgages and how much room sits behind them.
- What’s the money for? A clear business purpose makes for a clean file.
- How will it be repaid? Sale of an asset, refinance to a bank once accounts are up to date, a contract payment landing, or trading cash flow.
- Is there anything that complicates the title? Cross-leases, unit titles, rural land and shared ownership are all workable but take more care.
That focus is why no financials or tax returns are needed for the initial assessment through our panel, and why bad credit, defaults and arrears are considered case by case rather than being automatic declines.
What kinds of property can be used?
Property you or a supporting party already owns in New Zealand, including:
- your home (even with a mortgage already on it);
- a rental or investment property;
- commercial premises, including the building your business trades from;
- land, including sections and lifestyle blocks, subject to the lender’s criteria.
A family member can sometimes offer their property as security to support your loan. That’s a serious decision for them, and they’ll need their own independent legal advice. See alternatives to borrowing from family for other ways family can help without cash changing hands.
First mortgage or second mortgage?
If the property has no mortgage, a private lender can take a first mortgage. If it already has one, they may take a second mortgage, ranking behind the existing lender. Second mortgages let you release equity without disturbing a bank home loan you’re happy with. We explain the mechanics in second-mortgage business funding and business loan security explained.
What are the downsides?
- Price. Private money is typically dearer than bank money. It’s priced on the specific property, purpose and exit, and our job is to find the sharpest option available for your situation.
- Shorter terms. Private loans are generally short to medium term. That’s by design: they’re a bridge, not a 25-year home loan.
- Your property is at risk. If the loan isn’t repaid, the lender can enforce its mortgage. That’s true of any mortgage, but it deserves saying clearly.
- Exit risk. If your plan depends on a bank refinance, be realistic about what the bank will need to see and when. Our guide to planning an exit helps.
When does a private lender make the most sense?
Speed and certainty have a value. The question is whether, this time, that value is higher than the extra cost.
Examples where owners commonly choose private lending:
- A Tauranga builder needs to cover wages while a large progress payment is disputed.
- A Nelson hospitality owner wants to buy out a business partner before a deadline.
- A Hamilton importer has a container of stock to pay for and the bank’s credit team is three weeks out.
- A Christchurch contractor has IRD arrears and wants to clear them in one hit rather than negotiate a long arrangement.
How we help
We arrange property-secured business loans from $20,000 to $1m through a panel of non-bank and private lending partners. You tell us about the property and the purpose in a 60-second enquiry; a lending specialist calls to talk through the options. Where everything lines up, funding within 24 hours of approval is possible in some cases.