Why we don't publish a rate — and why the ones you see start with "from"
Look closely at any advertised rate in this market and there is a small word in front of it. From 0.77% per month. That word is doing all the work: it means the number is the best case on somebody's best file, and it is not the rate you are going to get. We would rather not put a number on a website that we already know is not yours.
Any lender doing this properly has to understand you first — who you are, your background, the property you are putting up, and how much you want to borrow. The rate falls out of those four things. Until a person has looked at them, there is no rate to publish, only a number chosen to win the click.
A HomeSec business loan costs interest on the amount borrowed for the months you hold it, plus a small commitment fee payable only once the loan is conditionally approved. There is no valuation fee, no application fee, no monthly or line fee, no fee to extend and no penalty for repaying early. The rate is set on your file and given in writing before you commit to anything.
Private lending is risk-priced, per file
Two businesses can look identical on paper and be priced differently, because the things that move the price are not the things on the front page. Take two applicants borrowing the same amount, on the same term, in the same industry:
- One has financial records up to date; the other does not. Different rate.
- One is offering residential real estate; the other commercial. Different rate.
- One has a clean credit history; the other has defaults. Different rate.
- One has a signed contract of sale as an exit; the other has an intention. Different rate.
A single published number cannot be true across all four, which is exactly why the ones you see carry the word from. It is a starting point on somebody's best file, not a quote, and it changes the moment a real application is assessed. That is what the industry calls a headline rate, and a headline rate is not a price.
What we do instead: you get a real number, in writing, on a Letter of Offer, within about two business hours of the first phone call — before you have paid us anything or committed to anything. That is a price. The thing on a competitor's homepage is not.
- 1. Security type
- Residential · commercial · land
- 2. LVR after our loan
- The lower, the better priced
- 3. Position on title
- 1st mortgage · 2nd · caveat
- 4. Quality of the exit
- Documented beats intended
- 5. Term
- Shorter is cheaper in total
- 6. Records available
- Not required — but they help
- 7. Credit history
- Considered, never disqualifying
Only two of these are about you. Five are about the deal. That is why we can lend to businesses that banks decline, and why we can price a good file sharply.
How the price is built
Every HomeSec loan is made of the same parts. The rate is the one line that changes from file to file; every other line is the same for everyone, and you can read it here before you call.
| What | When | How it works |
|---|---|---|
| Commitment fee | Once, on conditional approval | A small commitment fee, payable only once your loan is conditionally approved. Nothing is payable before you have a written offer in hand. |
| Interest | Monthly, on the amount drawn | Set on your file and stated on the Letter of Offer. Charged only on what you borrow, for the months you hold it. |
| Repayments | Your choice | Interest-only, or interest capitalised for up to 6 months. No daily or weekly direct debits. |
| Repaying early | Anytime, with no penalty | Unused months of capitalised interest are rebated, so a loan you planned for six months and repaid in four costs four months' interest. |
| Paying some of it down | From $10,000 | Ad-hoc paydowns from $10,000, once outside the capitalised-interest period. Interest then runs on the smaller balance. |
| Going longer | No fee | None — no rollover fees, legal fees or rewriting the loan to extend. The interest keeps running on the balance; nothing else changes. |
| Valuation, application, monthly and line fees | None | None — we don't use valuers. None — no monthly, line or account-keeping fees. There is no application fee and no fee to assess the file. |
Put together, a loan you hold for six months costs six months' interest on the balance and the commitment fee. A loan you planned for six months and repaid in four costs four months' interest and the commitment fee. A loan that runs to nine months costs nine months' interest and the commitment fee. Nothing else appears, and nothing changes shape when the plan does.
Caveat loan rates, second mortgage rates, private lender rates — the same question
People ask for the price of these as if they were three products. They are one product, a business loan secured by property, priced on where we sit on the title and what the property is. The ordering below holds on every file we write, and it is the part of pricing we can state without a number.
| Position and security | Where it sits, and why |
|---|---|
| First mortgage over residential property | The sharpest pricing we write. Nobody ranks ahead of us and the security is the easiest to value and to sell. |
| First mortgage over commercial property | A step up. Commercial property takes longer to sell and is assessed to 70% rather than 80%. |
| Second mortgage, residential or commercial | Priced for the position: a first mortgagee stands ahead of us and their balance is the first claim on the property. |
| Caveat, behind an existing mortgage | Fastest to settle, because it needs no consent — and priced for a position with no mortgage registered. The higher the first mortgage, the less equity is left and the higher the price. |
| Vacant land, rural or specialised property | Assessed on merit and priced case by case. Lower LVRs and longer sale periods both push the price up. |
Within each band the same three things move the price: the LVR after our loan, the quality of the exit, and the term. A first mortgage at 50% with a signed contract of sale as the exit is the best file we see. A caveat at 80% behind a large first mortgage, with an exit that is an intention, is the dearest. Most files sit between, and the Letter of Offer says exactly where.
The rate is one line. The total is the price.
Two loans with the same rate can cost very different amounts, and a loan with a lower rate can cost more. The difference is always in the structure, never in the headline, which is why the table below exists. Three structures that turn a low rate into a high total:
- A minimum interest period. Three months' interest charged on a loan you repay in six weeks is six weeks you paid for and did not use. HomeSec has no minimum period.
- Prepaid interest that is not refunded. Interest taken out of the advance up front is money you borrowed, paid interest on, and never received. Here, capitalised interest you do not use is rebated.
- Fees on top of the rate. An establishment fee charged as a percentage, a monthly line fee, a discharge fee and a default rate at the end of a fixed term. None of the four exist here, and the one fee that does is stated in writing before you commit.
Interest on a loan taken for a business purpose is generally deductible against the business's income, which lowers the after-tax cost of every option you are comparing by the same proportion. Ask your accountant how it applies to your structure; it belongs in the arithmetic.
Every fee that exists in private lending
Print this and ask every lender you speak to. The rate is one line of the cost; these are the rest. A lender who will not give you all of them in writing before you sign is telling you something.
| Fee | What it is | The question to ask |
|---|---|---|
| Establishment fee | Charged to set the loan up. Sometimes a flat amount, sometimes a percentage. | Flat or percentage? Payable if the loan doesn't settle? |
| Legal & disbursements | Preparing and registering the security documents. | Capped or open-ended? Whose solicitor? |
| Valuation fee | A sworn valuation by a registered valuer. | HomeSec does not require one |
| Application fee | Charged to assess the file, sometimes non-refundable. | HomeSec does not charge one |
| Minimum interest period | A floor on interest charged even if you repay in week two. | How many months minimum? |
| Prepaid interest | Interest deducted up front from the advance. | How many months, and is unused interest refunded? |
| Line / management fee | An ongoing monthly charge separate from interest. | Is there one, and is it in the rate you quoted me? |
| Extension fee | Charged to roll the loan past its term. | HomeSec charges none |
| Early repayment fee | A penalty for paying out early. | HomeSec charges none |
| Discharge / exit fee | Charged to release the security at the end. | How much, and when is it disclosed? |
| Default interest | A higher rate that applies after the term expires. | What is the rate, and when does it start? |
| Broker / introducer fee | Paid to whoever referred you, sometimes added to your loan. | Is a commission being added to my balance? |
Compare what you have been quoted
Put the numbers a lender has actually given you — ours or anyone's — into the calculator and see the total in dollars. That is the comparison that matters: a low monthly rate with a large establishment fee and a three-month minimum can cost more than a higher rate with neither.
Questions we get on the phone about cost
Why does HomeSec not publish an interest rate?
What does a caveat loan cost?
Is a second mortgage cheaper than a caveat loan?
What is the commitment fee, and when is it paid?
Are there any monthly, line or account-keeping fees?
What happens if I repay early?
What happens if I need longer than I planned?
Is the interest on a business loan tax deductible?
Why can a lower advertised rate cost more?
How do I get an actual price?
Every question in that table applies to us too. Call 1300 93 83 87 and ask them. Mon–Fri, 8:30am – 5:30pm Melbourne time.
See if you qualify in sixty seconds
Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.
That's the HomeSec Advantage.
Priced per file, on the position and the security. These are the positions.
Reviewed by Jason Brockmuller, Joint Chief Executive