Private lending rates: what actually drives the number.
Private lending is priced on risk, deal by deal. Two facilities of the same size can be quoted very differently because one sits first-ranking at 60% of value with an unconditional contract of sale as the exit, and the other sits second-ranking at 78% with a refinance that has not been credit-approved. Envision Private arranges facilities on behalf of wholesale investors, so pricing reflects the return those investors need for the specific risk being taken. The most useful comparison between offers is not the headline rate — it is the total cost to the borrower over the actual term, including establishment fees, line fees, brokerage, legal and valuation costs, and any exit or discharge fee.
When it makes sense
- Comparing two private credit offers on a like-for-like total cost basis
- Understanding why a second mortgage prices well above a first mortgage
- Working out whether a lower rate with a longer settlement is worth the delay
- Explaining pricing structure to a borrower or an investor client
- Deciding whether to prepay, capitalise or service interest monthly
Indicative loan parameters
| First mortgage | Lowest pricing tier — lower LVR and clean security price best |
| Second mortgage | Materially higher — reflects subordination and consent risk |
| Caveat / short-term | Highest tier — priced for days-to-weeks urgency and short terms |
| LVR | Each step up in LVR increases the required return |
| Term | 1 – 24 months; shorter terms carry higher annualised pricing |
| Other costs | Establishment fee, line fee, brokerage, valuation, legal, discharge |
How the process works
- Security and ranking — asset type, location, and whether the facility is first or second-ranking.
- Loan-to-value ratio — the single biggest driver of pricing on any private facility.
- Exit quality — an unconditional contract or approved refinance reduces risk and price.
- Term and drawdown — how long investor capital is committed, and whether it is drawn in stages.
- Written IOI — we set out rate, fees and conditions in writing so total cost is clear.