How to Choose a Private Lender

The private lending market in Australia has grown significantly over the past decade. More lenders means more choice — but it also means more variation in quality, transparency, and reliability. Choosing the wrong private lender can cost you money, time, and in some cases, your deal.

This guide covers the key criteria to evaluate, the red flags to watch for, and the questions you should ask before committing to any private lending arrangement.

Speed and Certainty of Decision

The primary reason borrowers choose private lending over bank lending is speed. A private lender that takes two weeks to provide an indicative term sheet is not delivering on the core value proposition. Look for lenders that provide same-day indicative terms and can settle within two to four weeks from application.

Equally important is certainty. An indicative approval that falls through at the last minute is worse than a slower but reliable approval. Ask about the lender's conversion rate — what percentage of indicative approvals actually proceed to settlement? Reputable lenders will have conversion rates above 80%.

Fee Transparency

This is where many borrowers get caught. Some private lenders advertise low headline rates but add fees that significantly increase the total cost: application fees, processing fees, valuation management fees, legal review fees, and exit fees that are not disclosed upfront.

A transparent lender publishes their full fee schedule. At Alphacon Capital, our fees are published on our website: establishment fee from 1.65%, loan management fee from $250 per month or from 0.1% per month depending on product, and risk fees based on a published schedule. There are no application fees, no processing fees, and no early exit penalties.

Before proceeding with any lender, ask for a full cost breakdown including all fees, charges, and third-party costs. If a lender cannot or will not provide this upfront, that is a red flag.

Product Range

A lender with a single product forces every deal into the same structure, regardless of whether it fits. Look for lenders with multiple products designed for different scenarios — standard bridging, fast metro deals, progressive drawdown for construction, and solutions for regional or complex structures.

A broader product range means the lender can match the right structure to your specific situation, rather than making your situation fit their only structure. At Alphacon Capital, our four products — Resolve, Boost, Flexi, and Reach — cover the full spectrum of commercial lending scenarios.

Broker Protection

If you are a broker, the lender's approach to broker protection matters. Look for lenders that guarantee broker commissions, do not clawback on early repayment, and do not solicit your clients directly. The relationship between broker and lender should be genuinely reciprocal.

Ask specifically: what happens to my commission if the borrower repays early? Does the lender contact my client directly for renewal? Is there a minimum commission guarantee? The answers to these questions reveal whether the lender views brokers as partners or as a distribution channel to be bypassed.

Coverage and Eligibility

Not all private lenders cover all of Australia. Some are metro-only. Some exclude certain property types. Some have minimum loan sizes that exclude smaller deals.

Before submitting a deal, confirm that the lender covers your postcode, accepts your property type, and can accommodate your loan size. Use tools like our postcode checker to verify eligibility before wasting time on an application that will be declined on geographic grounds.

Exit Flexibility

How easy is it to exit the loan? Reputable private lenders allow early repayment with minimal notice and no exit fees. Some lenders charge penalties for early repayment — effectively penalising the borrower for doing the right thing.

At Alphacon Capital, there are no early discharge fees on any product. Borrowers can repay at any time with 14 to 30 days notice depending on the product. This flexibility is critical for borrowers who plan to refinance to a bank once their long-term funding is in place.

Institutional Backing

Private lenders fund their loans from different sources. Some use their own capital (balance sheet lenders), some use pooled investor funds, and some use institutional warehouse facilities. The funding source affects certainty of settlement.

Institutional backing — where the lender has committed warehouse facilities from banks or institutional investors — provides the highest certainty. It means the capital is available and committed, not dependent on raising funds deal-by-deal. Ask where the lender sources their capital and whether facilities are committed or uncommitted.

Red Flags to Avoid

Be cautious of lenders that charge upfront application fees before providing an indicative term sheet, refuse to provide a full fee breakdown in writing, have unclear or undisclosed exit penalties, require exclusivity arrangements that prevent you from shopping the deal, take longer than two business days to provide indicative terms, or do not have a published product suite with clear eligibility criteria.

If something feels unclear or the lender is evasive about costs, move on. The Australian private lending market has enough quality participants that you should never have to accept opacity.

Questions to Ask

Before proceeding with any private lender, ask these questions: What is the full fee schedule including all charges? Are there any exit or early repayment penalties? What is your typical settlement timeline? What is your approval-to-settlement conversion rate? Do you cover my postcode and property type? Where does your capital come from? What is your approach to broker protection? Can you provide references from recent borrowers or brokers?

A reputable lender will answer all of these questions clearly and without hesitation.