Private Lending Glossary

Plain-English definitions of the terms you will see when borrowing from a private lender in Australia. Where a definition mentions Astro Capital Finance, it describes how we lend: business purposes only, secured by a registered first mortgage, Australia-wide excluding the Northern Territory.

Bridging loan

A short-term loan that covers the gap between needing funds now and a known future event that repays the loan, such as the sale of a property or a refinance. At Astro, bridging loans are for business purposes only and are secured by a registered first mortgage. Business loans

Business-purpose declaration

A signed statement by a borrower that the loan is wholly or predominantly for business or investment purposes. Under the National Credit Code it creates a presumption that the credit is for business purposes, but the presumption does not apply if the lender or broker knew or had reason to believe the credit was for personal purposes.

Business-purpose loan

A loan where more than 50% of the funds are used for business or commercial purposes. Business-purpose lending is generally outside the National Credit Code, so the lender does not need an Australian Credit Licence. Astro Capital Finance provides business-purpose loans only.

Capitalised interest

Interest that is added to the loan balance instead of being paid monthly, so the borrower makes no regular repayments and repays principal and interest together at the end of the term.

Caveat loan

A loan secured by a caveat lodged on a property’s title rather than a registered mortgage. A caveat gives notice of an interest in the property but is a weaker form of security. Astro Capital Finance does not offer caveat loans; every Astro loan is secured by a registered first mortgage.

Director penalty notice (DPN)

A notice the ATO issues to a company director that can make the director personally liable for the company’s unpaid PAYG withholding, GST or superannuation guarantee charge. The options available to the director depend on the type of notice and how quickly the director acts, so prompt professional advice is important. ATO tax debt funding

Establishment fee

A one-off fee charged by a lender for setting up a loan, usually deducted from the loan funds at settlement. Every fee Astro charges is set out on the term sheet.

Exit strategy

The way a short-term loan will be repaid at the end of its term, such as a refinance to a bank or other lender, the sale of a property or asset, or business income. Private lenders assess the exit strategy as closely as the security.

First mortgage

A mortgage registered on a property’s title that ranks ahead of any other mortgage, so the first mortgagee is repaid first if the property is sold. Astro Capital Finance lends on first mortgage only.

Garnishee notice

A notice that lets the ATO collect a tax debt directly from a third party who holds or owes money to the debtor, such as a bank or a customer. ATO tax debt funding

General interest charge (GIC)

Interest the ATO charges on overdue tax debts, calculated daily and compounding. Since 1 July 2025, GIC is not tax deductible.

Impaired credit

A credit history that includes defaults, late payments, judgments or other negative listings. Banks often decline impaired credit applications. At Astro, impaired credit is considered, subject to assessment.

Indicative terms

An early, non-binding outline of the loan amount, term and costs a lender may offer, given before full assessment. Astro gives brokers a same-day indicative answer on scenarios.

Letter of offer

The lender’s formal approval document setting out the loan amount, term, security, fees and conditions. Once accepted, the lender’s solicitors prepare the loan documents.

Loan-to-value ratio (LVR)

The loan amount divided by the value of the security property, shown as a percentage. A $600,000 loan against a $1,000,000 property is a 60% LVR. Astro lends up to 75% on metro residential; up to 65% on commercial, industrial and land; regional assessed case by case.

Low-doc loan

A loan assessed with less income documentation than a bank would require, relying more on the security property and exit strategy. At Astro, low-doc scenarios are considered, subject to assessment.

Non-bank lender

A lender that is not an authorised deposit-taking institution and funds its loans from wholesale markets or investors. Non-bank lenders usually offer long-term loans with more flexible policy than banks.

Notice to complete

A notice a vendor can issue when a purchaser fails to settle on the due date, giving a final deadline to complete. If the purchaser still does not settle, the vendor may be able to terminate the contract. The rules depend on the contract and the state. Urgent settlement finance

PAYG withholding

Tax an employer withholds from employees’ wages and pays to the ATO. Unpaid PAYG withholding is one of the company debts a director penalty notice can cover.

Prepaid interest

Interest for some or all of the loan term that is paid upfront, usually deducted from the loan funds at settlement, so no monthly repayments are needed.

Private credit fund

An investment fund that pools capital from investors to make loans directly to borrowers, outside the banking system.

Private lender

A non-bank lender that lends its own or investors’ money, typically on short terms secured by property. Private lenders focus on the security and exit strategy, which lets them decide faster than banks. Astro Capital Finance is an Australian private lender. Private mortgage finance

Refinance

Repaying an existing loan with a new loan, often from a different lender. Refinancing to a bank or other lender is the most common exit strategy for a short-term private loan.

Residual stock

Completed but unsold apartments, townhouses or lots left at the end of a property development. Developers sometimes borrow against residual stock to repay construction finance while the remaining stock sells.

Second mortgage

A mortgage that ranks behind an existing first mortgage on the same property, so it is repaid only after the first mortgagee. Astro Capital Finance does not offer second mortgages.

Security property

The real estate a loan is secured against. If the loan is not repaid, the lender can sell the property to recover the debt.

Settlement

The point at which a property purchase or loan completes: funds are paid, documents are exchanged and the title or mortgage is registered. Astro can settle loans in as little as 72 hours, subject to assessment.

Term sheet

A summary of a proposed loan’s key terms, including the amount, term, security, interest and fees. At Astro every fee is on the term sheet, and the term sheet matches the loan documents.

Valuation

An independent assessment of a property’s value by a registered valuer, ordered by the lender to confirm the security and calculate the LVR.

This guide is general information only, current as at the 'last updated' date above. It is not legal, tax or financial advice and does not take your circumstances into account. Astro Capital Finance provides credit for business purposes only and is not a tax agent, lawyer or financial adviser. Seek advice from a qualified professional before acting. Lending is subject to assessment, security and an acceptable exit strategy.