Key takeaways
- •The Reserve Bank has raised the cash rate four times in 2026, to 4.60% on 29 September, and has said it may raise the cash rate again if needed.
- •When a bank assesses a refinance of your private loan, it tests the loan at the interest rates that apply at the time of assessment, so the same rent or business income now supports a smaller loan.
- •The 3% serviceability buffer set by the Australian Prudential Regulation Authority applies to residential mortgage lending. A bank tests a commercial property loan, or a loan to a company, under its own policy.
- •To find the gap to cover before your private loan expires, take the amount needed to repay your private lender in full and subtract the bank's new maximum loan figure.
- •A private refinance loan from Secured Lending, from $250,000 and backed by property, can repay your expiring private loan in full and run for 1 to 24 months while a bank refinance, a sale or a smaller refinance is arranged.
- •Secured Lending decides on a refinance loan in hours and can settle within 24 hours, so the new loan can be in place before your private loan's expiry date.
If your private loan was meant to be repaid by a bank refinance, and the bank's figure has come back lower since the Reserve Bank announced another cash rate rise on 29 September 2026, the difference has to be found before the private loan expires. With the expiry date close, that is stressful, and it comes down to three numbers you can get in writing: the payout figure, the bank's new figure and the expiry date.
We would be glad to help you with this. If you, your business or a director owns property, a private refinance loan backed by that property is a good fit for this problem. We lend our own funds and can settle within 24 hours, so the new loan can pay out the existing private loan in full before its expiry date and start a new term of 1 to 24 months. We lend against the property, and our in-house team values it, so there is no wait for an external valuer. That gives the bank refinance, a property sale or a smaller refinance time to complete, on a repayment plan that does not depend on interest rates falling.
What changed: four cash rate rises in 2026
On 29 September 2026 the Reserve Bank raised the cash rate target by 25 basis points to 4.60%, noting that the three earlier increases this year had already tightened financial conditions. The Reserve Bank's cash rate table lists four rises in 2026, taking the target from 3.60% at the start of the year to 4.60%.
In the same statement, the Board said it may raise the rate again: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed."
That matters for a refinance because a bank tests the application at the interest rates that apply when it assesses it, not at the rates that applied when your private loan was written.
Why the bank's refinance figure is lower now
For a commercial property loan, a bank commonly checks that the rent or the business income covers the interest with a margin to spare. The Reserve Bank describes the interest cover ratio as earnings over interest expenses. When the interest rate the bank uses to test the loan goes up, the same income supports a smaller loan.
Illustrative example only. The cover requirement and the assessment rates below are assumed for the arithmetic and are not any bank's policy. A commercial property earns $150,000 a year in net rent. Assume the bank requires the rent to be at least 1.5 times the interest, so the interest can be no more than $100,000 a year.
| Assessment rate (assumed) | Maximum loan on $150,000 net rent |
|---|---|
| 7% p.a. | about $1,428,571 |
| 8% p.a. | $1,250,000 |
A 1 percentage point higher assessment rate cuts the maximum loan by about $178,571, or 12.5%, with no change in the rent. On these numbers, a bank figure that matched your payout figure when the private loan was written can now fall short of it. How far your own bank's rates have moved is a question for your broker.
Was it the 3% serviceability buffer?
It depends on the loan. The 3% figure is the minimum the Australian Prudential Regulation Authority sets for residential mortgage lending. Under the Authority's prudential standard, Credit Risk Management, which applies to banks, a lender assessing a residential mortgage must add a buffer to the loan's interest rate to test whether the borrower can service it, and the standard sets the floor: "The level of the serviceability buffer must be at least 3.0 per cent, unless determined otherwise by APRA." The Authority's practice guide, Residential Mortgage Lending, covers lending secured by mortgages over owner-occupied and investment residential property.
A loan to a company is assessed differently. The same standard requires the bank to consider, where relevant, how the borrower would repay under scenarios such as a rise in interest rates, along with the business's cash flows and its industry. It does not set a buffer figure for a commercial property loan, so each bank applies its own test. That is why two lenders can reach different figures on the same income. Your broker can tell you which test your application was assessed under.
Work out how much the new loan needs to be
Three documents give you the numbers:
- •The payout figure. Ask your current lender for a written payout figure as at the expiry date, including interest to that date.
- •The bank's new figure. Ask your broker for the bank's current maximum in writing, or for the decline letter.
- •The expiry date. Take it from the loan contract or any extension letter.
The payout figure less the bank's new figure is the gap. Continuing the illustrative example, a payout figure of $1,400,000 against a bank figure of $1,250,000 leaves a gap of $150,000 that has to come from somewhere other than the bank, such as a property sale or cash.
If the current loan capitalises interest, adding it to the balance, the payout figure rises each month the loan runs while the bank's figure has moved down. Paying the loan out before it expires stops that balance growing. And because the Reserve Bank has said it may raise the cash rate again, the repayment plan for the new loan should have a date that does not rely on rates coming down.
How a private refinance loan pays out the expiring loan
The new loan is made to the business or entity that borrowed the existing loan. At settlement the loan funds are used to pay your current lender's payout figure, and the existing private loan is discharged, so its expiry date no longer applies. You then repay us through a defined exit: the bank refinance once the figures support it, the sale of a property, or a smaller refinance.
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a. on refinance and bridging loans, from 11.95% p.a. on a second mortgage |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property |
| Maximum loan-to-value ratio | 70%. For a second mortgage, the first and second mortgages combined |
| Repayment | Through a defined exit, such as the bank refinance, a property sale or a smaller refinance |
We lend our own funds to businesses, property investors and developers. The ways borrowers use the loan in this position fall into three groups.
Pay out the expiring loan in full
Where the payout figure fits within 70% of the property's value, one loan replaces the current one on a new term. This is the most direct form of refinancing a private business loan: one lender is paid out, and one new loan with one end date replaces it.
Run the loan until the bank or a sale is ready
Where your repayment depends on a dated event, such as a property sale with a settlement date or a bank application being reworked at the lower figure, the new term runs past that date. The bank application then no longer has to be approved before the private loan's expiry date. Our guide to private mortgage exit strategies sets out the repayment plans borrowers most often use for a short-term loan.
Sell one property and refinance the rest
Where you own a second property, selling it can close the gap between the payout figure and the bank's new figure. The new loan pays out the current lender before the expiry date and runs long enough for the sale to settle and the bank refinance to complete at its new figure. If the private loan is one of several debts falling due together, our debt restructuring loans replace more than one lender with a single loan.
Whether to sell or hold a property, and the tax on a sale, are questions for your accountant. We are a lender, and we do not give tax advice. Which bank product suits you after the private loan is a question for your broker.
How fast it can be in place before the expiry date
We decide in hours, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours. Our in-house valuation team values the property, so there is no wait for an external valuer.
Work back from the expiry date, and ask your current lender how much notice it needs to prepare the discharge of its mortgage. If the expiry date is days away or has already passed, our page on refinancing an expiring private loan urgently covers that timetable. If the current lender has issued a default notice, ask your solicitor what the loan contract allows the lender to do and when.
Frequently asked questions
Can another private lender pay out my loan before it expires?
Yes. At settlement the refinance loan funds are used to pay your current lender's payout figure, and the existing loan is discharged. We decide in hours and can settle within 24 hours, so the written payout figure and the expiry date are the first two things to have to hand.
Can I sell one property and refinance a smaller amount on the rest?
Yes. Selling one property can close the gap between your payout figure and the bank's new figure. Our loan can pay out the current lender before the expiry date and run until the sale settles and the bank refinance completes. Whether to sell is a question for your accountant.
How is the new loan repaid?
The loan runs for a set term of 1 to 24 months, typically 3 to 6, and you repay it through a defined exit by the end of that term. When you apply, tell us how you plan to repay it and when, for example the bank refinance at its new figure or the sale of a property, so the term can be matched to that date.
What property can back the loan?
Our loans are backed by residential, commercial or industrial property owned by you, your business or a director, including property already held in a company or a trust. The loan can be a first mortgage, or a second mortgage behind an existing loan, with a maximum loan-to-value ratio of 70% across both.
How Secured Lending Can Help
We would be glad to help you pay out your private loan before it expires. If the bank's figure has fallen since the rate rises, our refinance loan can pay out the expiring private loan in full and give you a new term, sized to today's numbers, for the bank refinance, a sale or a smaller refinance to complete. You then repay us through that defined exit.
A private loan suits this problem because it is quick and because it is secured against property. We lend our own funds, our in-house team values the property, and we can settle within 24 hours. We decide in hours and issue a letter of offer as soon as terms are agreed, so the new loan can be in place before the expiry date.
We provide secured loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:
- •The current lender's written payout figure and the expiry date.
- •The bank's current maximum figure, or its decline letter.
- •The property that could back the loan, its estimated value and any existing loan on it.
- •How you plan to repay the new loan, and roughly when.
You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you. In most cases, we can tell you within hours whether we can help.
