How do you finance a house flip in Australia?

How do you finance a house flip in Australia? It is the question that quietly stops a lot of people before they ever put in an offer, because a flip does not borrow like a normal house purchase. You are not moving in, you are not renting it out, and you are planning to sell inside a year. Almost every default assumption a bank makes about a home loan is wrong for a flip, and once you understand why, the finance options start to make sense.

This is a plain-English walkthrough of where the money comes from, what a lender actually wants to see, and what the money costs you while you own the place. General information only, not financial or credit advice, but it is the same map I work through before I take a deal seriously.

Why a flip doesn't fit a standard home loan

Start with the mismatch, because it explains everything that follows. An owner-occupier loan is for a house you live in, and a flip is not that. A standard investment loan is closer, but it is priced and assessed for a long hold, where rent covers the repayments and the bank expects the property to sit on its books for years. A flip has no rent, a short clock, and a plan to knock the place around before you sell it.

There is a second problem that catches first-timers. A normal loan lends against what you pay for the house, not against what it will be worth once you have finished it. So the renovation money is not in the loan. On a short flip, unless you go to a specialist lender who will look at the finished value, the reno comes out of your own pocket, which is exactly why the cash you need is so much more than the deposit. The finance question and the cash question are two sides of the same deal.

So a flip needs money that is comfortable with a half-renovated house, no rental income, and a fast exit. That narrows the field.

Where the money actually comes from

There are really four ways flippers fund a deal, and most people end up using two of them together.

Equity in a property you already own. If you have a home or another property with equity in it, you can release some of that equity, or set up a line of credit against it, to fund the deposit and the buying costs. A line of credit lets you draw funds as you need them and charges interest only on what you have actually drawn, which suits a reno where the spend is staged. This is usually the cheapest money you can get, because it is secured against your own property at ordinary mortgage rates. The trade-off is obvious: you are putting your own home behind the deal.

Bridging finance. A bridging loan is a short-term loan that covers the gap while you buy, renovate and sell. The useful feature for flippers is that interest is often capitalised, meaning no monthly repayments while the renovation is underway, and settlement can happen in as little as five to ten business days. The catch is that the capitalised interest still accrues, so a slow reno quietly grows the balance.

Short-term or private lending. This is finance built for the job. Private lenders focus on the asset and the exit rather than just your income and credit score, and can approve very quickly, sometimes inside a few days. They are comfortable lending against an unfinished house, which a mainstream bank is not. It is the fastest and most flexible option, and also the most expensive, so it earns its place on tight-timeline deals rather than as a default.

A specialist renovation lender. A smaller group of lenders will consider the finished value and advance some of the reno budget, rather than only lending against the purchase price. That helps the cash-to-complete, but the assessment is heavier and the rate reflects the risk.

In practice a common structure is to release equity from your existing property for the deposit and costs, then use a second secured loan or private facility against the project for the balance and the reno. The two stack, which is why your total borrowing capacity matters more than any single loan.

What a lender wants to see on a short-hold deal

A short-hold lender is not underwriting your salary the way a bank does. They are underwriting the deal. Three things carry the most weight.

The loan-to-value ratio. Short-term and private lenders are conservative on how much they will advance. Guides put the first mortgage at around 65% of value, rising to roughly 70% to 75% combined where a second mortgage sits behind it. A lower LVR means a bigger cash contribution from you, not a smaller one, so it feeds straight back into your deposit and cash-to-complete.

A credible exit. The exit is the sale, and on a flip that is what the lender is really lending against. You will typically need to show you are planning to sell within about twelve months to qualify for this kind of short-term loan. A believable end value backed by comparable sales, and a realistic timeline, do more for your application than a high income.

A contingency. Lenders who do this often want to see that you have a buffer for the reno running over or the sale running late. It is the same buffer that keeps you solvent if the timeline slips, so it is worth having whether they ask for it or not.

Notice what is missing from that list: there is far less weight on payslips and far more on the asset and the exit. That is the whole point of short-hold finance, and it is why it moves faster than a bank.

What the money costs, and how it hits your holding cost

This is where finance stops being an abstraction and starts eating your margin. Short-term and private money is not cheap. Residential bridging and private lending rates in 2026 commonly sit somewhere around 8% to 14% per annum depending on LVR, the property, your profile and the term, well above a standard mortgage. On top of the rate, establishment fees of roughly 1.5% to 2.5% of the loan are typical, and you may also carry valuation and legal costs.

The rate is only half the story, though. Because the interest is often capitalised, it compounds against a fixed sale date, so the cost of the money is really the rate multiplied by how long you hold. Every extra week the reno runs, or the sale takes to land, adds interest that comes straight off your profit. That is why financing a flip and the holding costs of a flip are the same problem wearing two hats, and why an expensive loan on a fast deal can easily beat a cheap loan on a slow one.

So the way to weigh it up is not "what is the cheapest rate", it is "what does this money cost me over the hold I actually expect". Put the deal through the flip ROI calculator with the real interest rate and a conservative timeline, and watch what the cost of the money does to the return. If it still pencils with the expensive money and a slow sale, you have a deal that can absorb a surprise.

So how do you finance a house flip in Australia?

Match the money to the hold. Cheap equity from your own property is the foundation if you have it; bridging or short-term private lending fills the gap when speed matters more than rate; a specialist lender helps when the reno budget is the sticking point. Whatever the mix, the lender is really backing your exit, so the strongest thing you can bring is a credible end value and an honest timeline, not a big income.

Then price the money into the deal, not around it. Add the rate and the fees to your holding costs, run the flip ROI numbers on the hold you honestly expect, and cross-check the full cash-to-complete so the finance and the deposit line up. Get that right and the finance stops being the thing that scares you off a deal and becomes just another cost you have already modelled. If you want the app running those numbers on your next deal in a few minutes, that is what FlipPro is for.

This is general information only and not financial, credit, tax or legal advice. Lending policy, LVR limits, interest rates, fees and product availability vary by lender and your circumstances, and they change over time. The figures here are indicative and current at the time of writing. Speak to a licensed mortgage broker or lender and get independent advice before you commit to any finance.

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