Bank, Non-Bank, and Private Lending: What You Need to Know

As Australia’s capital markets shift, understanding the different types of lending has never been more important. Whether you’re a business owner, property investor, or looking to refinance, knowing your options across bank, non-bank, and private lending can make all the difference.

The Evolving Finance Landscape

The traditional dominance of bank lending has been gradually giving way to alternative forms of finance. According to the latest ASIC report, private credit alone has grown 161% over the past decade and now manages over $148.6 billion in assets. At the same time, superannuation funds are playing an increasingly dominant role in shaping both public and private capital markets, while public listings continue to decline.

This shift is being driven by a few key factors:

• Higher compliance and regulatory burdens in public markets

• The need for faster, more flexible access to funding

• Global trends in investment diversification

As a result, private loans and non-bank options are increasingly being used for everything from bridging finance and construction loans to equity release for commercial purposes.

What Are Your Lending Options?

Let’s break down the differences between the three key types of lenders:

1. Traditional Bank Lending

Bank loans remain a solid choice for borrowers with strong financials and a preference for stability. Banks generally offer:

• Competitive interest rates (especially for low-risk clients)

• Comprehensive financial products and services

• Strict regulatory oversight

  
  

Scenario: A homeowner looking to refinance their loan for a better rate and lower monthly repayments would typically start with a bank. If they have a good credit score, stable income, and sufficient equity, a bank is likely to offer favourable terms.

2. Non-Bank Lending

Non-bank lenders are financial institutions that do not hold a banking license. They often cater to clients who fall outside traditional lending criteria. Benefits include:

• Greater flexibility in assessing applications

• Faster approval processes

• Innovative loan structures for unique borrower needs

  
  

Scenario: A self-employed borrower with strong business performance but irregular income may find it easier to secure a loan through a non-bank lender, who can evaluate cash flow and financials beyond standard PAYG income.

3. Private Lending

Private lenders include individuals or firms that offer capital without the same regulation or compliance as banks. These loans are typically short-term and asset-backed.

• Useful for time-sensitive deals, such as bridging finance

• Helpful in high-risk or complex scenarios (e.g. development finance)

• Faster access, fewer hurdles

  
  

Scenario: A property developer needing quick access to capital to secure a development site before rezoning approval might opt for a private lender. The terms may come at a higher cost but can be worth it for the opportunity.

Risks and Considerations

Private lending is not without its challenges. Less regulation means borrowers must do their due diligence. Valuation risk, limited transparency, and short repayment terms can all present pitfalls for the unprepared.

That’s why it’s crucial to work with experienced brokers who understand the nuances of all three lending types.

Why Brokers Matter

Mortgage brokers now facilitate 75% of all new home loans in Australia - up from 56% in 2017. According to the MFAA, brokers help borrowers save an average of 0.35% on interest through repricing and offer access to a wider range of lenders and products.

At AAA Mortgages, we work with over 80 lenders - including banks, non-banks, and private financiers - to find the right solution for your unique situation. Whether you're a first-home buyer, business owner, or commercial investor, our team knows who to go to, how to structure your deal, and how to negotiate favourable terms.

Real-World Examples:

• Commercial Buyer: A client buying their first commercial property worked with our team to move beyond residential lending into a more complex space. With the AAA team guiding them, they navigated the process confidently and secured a competitive loan tailored to their new asset.

• Development Loan: We recently helped a developer secure a private loan for a land banking opportunity. Speed was critical, and traditional lenders couldn't meet the timeline. Our access to private capital made it happen - and the client now has a pipeline worth millions.

• Refinancing Win: One of our team members contacted a bank directly for a client whose loan wasn’t even with us. Within 24 hours, we secured a drop from 8.15% to 6.15%, saving them tens of thousands per year.

As private capital continues to grow and reshape Australia's lending landscape, understanding your options is key. Each type of lender offers unique benefits and drawbacks - but the right broker can guide you to the best fit.

If you're considering your next move, contact the team at AAA Mortgages. From acquisition to completion, we're with you every step of the way.

Book an appointment with us today, we’re here to help.