Mezzanine Finance in Australia 2025: Private Lending Guide (Rates from 15-25%)

Mezzanine Finance in Australia: Your Complete 2025 Guide

Higher-risk funding that sits between senior debt and equity, often used in property development. In Australia, mezzanine finance are available from banks, non-bank lenders, and private lenders—each with different criteria, rates, and timelines.

Key Takeaways

Interest rates from 15-25% p.a. with private lenders
Maximum LVR up to 75-85% combined

Typical loan term: 12-24 months
Approval in 24-48 hours; settlement in 5-14 days

Bank alternative when traditional lenders decline

What are Mezzanine Finance?

Higher-risk funding that sits between senior debt and equity, often used in property development. Mezzanine Finance are commonly used for:

Development equity gap
Acquisition funding

Project completion
Pre-sales shortfall

Mezzanine Finance Rates and Terms (2025)

Current Market Rates

Lender Type	Interest Rate	Max LVR	Approval Time
Major Banks	7-9% p.a.	65%	6-12 weeks
Non-Bank Lenders	8-11% p.a.	75-85% combined	2-4 weeks
Private Lenders	15-25% p.a.	75-85% combined	3-7 days

Fee Structure

Fee Type	Typical Range
Establishment fee	1-3% of loan amount
Legal/documentation	$1,000-$3,000
Valuation	$500-$2,000
Exit/discharge	$0-$500

Bank vs Private Mezzanine Finance

When to Use Bank Finance

You have 8+ weeks before funds needed
Your income and credit are strong

You want the lowest possible rate
You meet all standard bank criteria

When to Use Private Finance

You need funds in 1-2 weeks
Bank has declined or is too slow

Your situation is non-standard
You need flexibility in structure

Mezzanine Finance Requirements

What Private Lenders Need

Essential:

Property or asset as security
Sufficient equity (typically 25-50%)

Clear purpose for funds
Defined exit strategy

Documentation:

Property details and valuation
Purpose of funds statement

Exit strategy evidence
ID verification

What You DON'T Need:

Extensive income verification
Perfect credit history

Years of financial statements
Complex serviceability assessments

The Mezzanine Finance Process

Step 1: Initial Enquiry

Provide basic details about your funding needs:

Amount required
Property/asset security

Purpose of funds
Timeline requirements

Step 2: Preliminary Assessment

Lender reviews the opportunity:

Desktop valuation
LVR calculation

Exit strategy assessment
Indicative terms provided

Step 3: Formal Application

Submit full documentation:

Complete application form
Property details

Supporting documents

Step 4: Valuation and Due Diligence

Lender commissions:

Independent valuation
Title search

Legal review

Step 5: Approval and Settlement

Formal approval issued
Legal documents prepared

Settlement completed
Funds disbursed

Typical Timeline: Private lenders 5-14 business days; Banks 8-12 weeks

Case Study: Mezzanine Finance

Situation:
A business owner needed $500,000 for development equity gap. Their bank had been assessing the application for 6 weeks with no decision.

Challenge:

Time-sensitive opportunity
Complex income structure

Bank couldn't provide certainty

Solution:
Private lending provided:

Approval: 48 hours
Settlement: 7 business days

Rate: 15% p.a.
LVR: 70%

Outcome:

Secured the opportunity
Met tight deadline

Refinanced to bank within 6 months
Total private lending cost offset by opportunity value

Risks and Considerations

Key Risks

Higher Total Cost - Private lending costs more than bank finance
Property at Risk - Default can lead to property sale

Short Terms - Requires clear exit strategy
Market Changes - May affect exit strategy viability

Risk Mitigation

Maintain conservative LVR
Have backup exit strategies

Build in time buffers
Work with experienced professionals

Frequently Asked Questions

How quickly can I get mezzanine finance approved?

Private lenders typically approve within 24-48 hours and settle within 5-14 business days. Banks take 8-12 weeks.

What's the minimum loan amount for mezzanine finance?

Most private lenders have minimums of $100,000 to $250,000. Banks may have lower minimums but stricter criteria.

Can I get mezzanine finance with bad credit?

Yes, private lenders focus primarily on property security rather than credit history. Your exit strategy matters more than your credit score.

What happens if I can't repay on time?

Options include extending the loan (with fees), refinancing to another lender, or selling the security property. Discuss contingencies with your lender upfront.

Do I need specific experience for mezzanine finance?

For some loan types (development, construction), experience helps secure better terms. First-timers can still access funding with conservative structures.

Can I refinance mezzanine finance to a bank?

Yes, this is a common exit strategy. Many borrowers use private lending as a bridge while preparing bank applications.

What properties are acceptable as security?

Most residential and commercial properties in metropolitan and regional areas. Rural properties may have lower LVRs.

Are there prepayment penalties?

Most private lenders allow early repayment. Some may have minimum interest periods (1-3 months). Check terms before signing.

Getting Started with Mezzanine Finance

Ready to explore your options?

Know your requirements - Amount, term, purpose
Understand your exit - How will you repay?

Prepare documentation - Property details, purpose statement
Compare offers - Get quotes from multiple lenders

Proceed with confidence - Work with experienced professionals

On Introducr, you can post your mezzanine finance request and receive competitive offers from verified lenders within 48 hours.

Disclaimer: This information is general in nature. Mezzanine Finance terms vary by lender and circumstance. Seek independent financial advice for your specific situation.

Last updated: January 2025