What Fees Are Involved in Private Lending? 2025 Guide
Expect establishment fees of 1-3%, plus legal, valuation, and potential exit fees. Learn everything about what fees are involved in private lending in this guide.
What Fees Are Involved in Private Lending?
Expect establishment fees of 1-3%, plus legal, valuation, and potential exit fees.
This is one of the most common questions about private lending in Australia. Here's everything you need to know.
The Short Answer
Expect establishment fees of 1-3%, plus legal, valuation, and potential exit fees.
Detailed Explanation
Private lending involves several types of fees beyond the interest rate:
Common Fee Structure:
| Fee Type | Typical Range | When Paid |
|---|---|---|
| Establishment fee | 1-3% of loan | Settlement |
| Legal/documentation | $1,000-$3,000 | Settlement |
| Valuation | $500-$2,000 | Application |
| Exit/discharge | $0-$500 | Repayment |
| Extension fee | 1-2% | If extending |
Example Cost Calculation:
For a $500,000 loan at 12% p.a. for 12 months:
| Cost Item | Amount |
|---|---|
| Interest (12 months) | $60,000 |
| Establishment (2%) | $10,000 |
| Legal fees | $2,000 |
| Valuation | $1,000 |
| Total Cost | $73,000 |
Tips for Managing Costs:
- Compare multiple lenders
- Negotiate establishment fees
- Ask about early repayment discounts
- Factor in all costs when calculating ROI
- Consider shorter terms if possible
Key Points to Remember
- Private lending is a legitimate, regulated form of finance in Australia
- It's designed for borrowers who need speed, flexibility, or non-standard solutions
- Always understand your obligations before signing
- Work with reputable, verifiable lenders
- Have a clear exit strategy
Related Questions
Are there hidden fees in private lending?
This relates to what fees are involved in private lending. The key consideration is understanding how private lending works differently from bank lending, focusing on property security rather than traditional lending criteria.
Can I negotiate private lending fees?
This relates to what fees are involved in private lending. The key consideration is understanding how private lending works differently from bank lending, focusing on property security rather than traditional lending criteria.
What is the total cost of a private loan?
This relates to what fees are involved in private lending. The key consideration is understanding how private lending works differently from bank lending, focusing on property security rather than traditional lending criteria.
Getting Expert Advice
If you have specific questions about what fees are involved in private lending, consider:
- Consulting a finance broker - They understand multiple lender options
- Seeking legal advice - Especially for complex situations
- Comparing multiple lenders - Terms vary significantly
- Using lending marketplaces - Access multiple options at once
Next Steps
Ready to explore private lending options?
On Introducr, you can post your funding request and receive competitive offers from verified private lenders within 48 hours. Compare rates, terms, and approval timeframes to find the best solution for your situation.
Disclaimer: This information is general in nature. Your situation may have specific considerations. Seek independent financial advice for your circumstances.
Last updated: January 2025
Topics covered: