Business Owner Refinances $1.5M Facility, Stops Mortgagee Action | Go For Broker

Business Loans, Refinance, Private Lending, Debt Consolidation, Case Study

Discover how Go For Broker helped a business owner refinance a $160,000 private loan that had ballooned to $330,000 in default, arranging a $1,500,000 facility over 36 months at 17.99% per annum - down from 24% - to stop mortgagee possession action and clear the arrears in full.

A $160,000 loan became $330,000 in a matter of weeks once it fell into default. The property was heading toward mortgagee possession. The number that mattered wasn't the rate on the new facility - it was how fast the old one was compounding against him.

Rate tells you the cost of borrowing. It doesn't tell you the cost of not acting. This client's original private loan nearly doubled in a few weeks once it defaulted - which makes almost any properly structured refinance look like the cheaper option by comparison.

First, Why the Banks said No

Every reason the bank gave was really one problem compounding on itself.

The debt had already spiralled. By the time refinancing was being explored, the original $160,000 second mortgage had grown to $330,000 in default, and banks weren't in a position to refinance a debt of that size, on that timeframe, in that condition.

The timeframe was compressed. With mortgagee possession action already in motion, there wasn't time for a standard bank process to run its course.

An earlier refinance attempt had failed. A different broker had already tried and been unable to get the deal done - the situation kept getting harder, not easier, the longer it sat unresolved.

Our Thinking

This wasn't someone avoiding their debts. The client already had a plan in place to sell an investment property to resolve the situation, had a third child on the way, and simply needed time and the right structure to catch his breath - not a lender adding further pressure while a solution was already underway.

The Numbers

New Facility:$1,500,000

Term:36 Months

Rate:Reduced from 24% (the toxic debt) to 17.99% per annum

Toxic Debt Refinanced:$330,000 (originally a $160,000 second mortgage)

Capitalised Interest:3 Months, No repayments required

What people miss

The number that should alarm anyone in this position isn't the rate on the new facility - it's the growth rate on the old one. A $160,000 debt became $330,000 in a matter of weeks once it defaulted. Left unresolved on that trajectory, the cost of doing nothing wasn't linear - it was compounding fast, and mortgagee possession was the endpoint. Against that, a 36-month facility at 17.99%, with three months of breathing room built in, isn't the expensive option. It's the one that stopped the compounding.

The point isn't that one is better

A facility at 17.99% over three years is not cheap money, and nobody should treat it as a long-term solution. The plan here is exactly what it should be: stabilise the situation, sell the investment property as intended, and refinance down to bank-level pricing once the arrears and default history are behind him.

The comparison that matters isn't this facility against an ideal bank rate that was never on offer. It's this facility against a debt that had already shown it could nearly double in a matter of weeks. One of those is a number you can plan around. The other wasn't.

The Outcome

• $1,500,000 facility arranged over 36 months, refinancing the toxic $330,000 debt

• Mortgagee possession action stopped

• Mortgage arrears cleared

• Rate reduced from 24% to 17.99% per annum

• Three months of capitalised interest built in, with no repayments required during that period

• Settled within a couple of weeks

Could Your Clients Benefit from a Similar Strategy?

If you're an accountant, adviser, or agency working with a client whose private finance has spiralled - a loan that's ballooned in default, mounting arrears, or mortgagee action already in motion - this case shows what's achievable when the priority shifts from finding the cheapest rate to stopping the compounding. For businesses and individuals across Australia, a debt already growing out of control needs a fast, structural fix, not another comparison against an ideal rate that was never actually on offer.

Whether the underlying pressure is a private loan that's defaulted, an earlier refinance attempt that fell through, or mortgagee possession action already underway, a broker with access to a wide panel of private lenders - able to move quickly, clear arrears, and structure in genuine breathing room - can stop the trajectory and buy time for a planned, sustainable resolution.

FAQs

What can I do if a private loan I took out has gone into default and the debt is growing quickly? Speaking with a commercial finance broker with access to a wide panel of private lenders can help - a broker may be able to refinance the debt with a new lender, clear arrears, and stop further default action, even where the situation feels urgent.

Can I still get finance if my property is facing mortgagee possession action? In some cases, yes - if a clear refinance plan and adequate security are in place, a private lender may be able to move quickly enough to refinance the debt and stop the action before it proceeds further.

Why would refinancing into a large facility be the right move if the rate is still high? Because the comparison isn't between the new facility and an ideal low rate - it's between the new facility and a debt already compounding out of control. Stopping that trajectory and buying time for a planned resolution, such as a property sale, can be worth far more than the interest cost involved.

Is it risky to arrange private finance directly without a broker? It can be - a broker can help compare lenders and terms so a borrower doesn't end up on an unexpectedly high rate or unfavourable conditions, and can also step in to refinance if an existing arrangement becomes unmanageable.