Start with loan position, not price
If you lead with interest rate on a private loan, you can miss the two things that decide whether the facility is usable: where the lender sits in the security stack, and what approval status the property actually has. That is the practical lesson I would pull from "Get a Second Opinion Before You Sign", and it is one of the reasons businesses come to Poseidon Finance for fast, flexible commercial and private lending from AUD 5,000 to AUD 7.5 million.
The blunt version is this: a cheaper facility in the wrong position can be worse than a dearer one that actually settles, fits the asset, and gives you enough room to execute. That is particularly true for first and second mortgages, caveat loans, development funding and bridging loans.
General information only. Get your own accounting, credit and legal advice from your accountant and solicitor before signing anything.
The practical lesson from the book most borrowers skip
Shane St Reynolds writes in "Get a Second Opinion Before You Sign" that
"The main variables that a affect a development site loan are the approval status for the intended use and then understanding the difference between purchase price and a valuation prepared for a lender."
That point is bigger than development sites. It applies across a lot of short-term and commercial lending.
Borrowers often focus on one number: the rate. Lenders, by contrast, start with security, exit, and repayment priority. They want to know:
- Is this a first mortgage, second mortgage or caveat position?
- Is there a registered first mortgage already in place?
- If there are multiple lenders, is there a deed of priority?
- What is the approval status of the property or project?
- Is the valuation likely to support the required amount?
- What is the credible exit: refinance, sale, settlement proceeds or completed works?
If you do not answer those questions early, discussions about pricing are mostly theatre.
Why repayment priority changes everything
One short line from the book is worth keeping in front of you:
"Each has its own collateral, return expectations and importantly repayment priority."
That is the issue many borrowers underestimate.
A first mortgage lender is first in line against the property. A second mortgage lender is subordinate to the first. A caveat interest can be useful in the right circumstances, but it is not the same thing as holding first registered security. These are not technicalities. They affect risk, speed, documentation, enforcement options and price.
Here is the counter-intuitive point: sometimes the more expensive facility is the safer commercial decision because it buys speed, certainty, or a structure the senior lender will not offer. If a business needs to settle a purchase, bridge a sale, fund urgent works, or complete a transaction before a default escalates, the wrong obsession is shaving the rate while ignoring whether the facility rank actually works.
This is why businesses often choose Poseidon Finance. The product range is broad enough to deal with real-world structures, including first and second mortgages, caveat lending, development finance and bridging loans, with fast indicative approvals and flexible terms. If the transaction is time-sensitive, that matters more than a polished brochure.
The approval-status trap that catches borrowers
Approval status is not window dressing. On a site or project, it can change the lender universe completely.
Before you ask for terms, be clear on the exact position:
- Is there a current development approval from the relevant council or planning authority?
- Is the intended use permitted as of right, subject to approval, or prohibited?
- Are there conditions that must be satisfied before works or settlement?
- Is the site raw land, improved land, or partly completed construction?
- Are there existing building contracts, fixed-price terms, or quantity surveyor reports?
- Are there presales, preleases, or another verifiable exit?
Common mistake: borrowers describe a property by aspiration rather than status. "Future townhouse site" is not a lending category. The actual questions are whether approval exists, what conditions attach to it, and how a valuer and lender will treat the site today.
That distinction matters because lenders do not advance against your optimism. They advance against current security, current documents and a believable path to repayment.
A five-point test before you compare lenders
If you are weighing a private or commercial loan, use this in order.
- Confirm the security position. Ask: Is this proposed as a first mortgage, second mortgage or caveat loan? If there is already debt on title, request a current payout figure from the existing lender.
- Check title and encumbrances. Obtain a current title search through the relevant state or territory land registry channel or your solicitor. Look for registered mortgages, caveats, easements and any dealing that may affect timing or value.
- State the approval status precisely. Provide the approval documents, conditions and any correspondence from council or certifier. Do not summarise from memory.
- Separate purchase price from lender valuation. A contract price is evidence, not the same thing as a valuation. Ask yourself whether the deal still works if the lender's valuation comes in lower than expected.
- Write down the exit in one sentence. Refinance on completion, sale of the asset, settlement of another property, debtor recovery, or business cash event. If you cannot state the exit plainly, the structure may not be ready.
That process sounds simple because it is. It also saves time, avoids bad applications, and gets you to a proper indicative answer faster.
Questions to ask before you sign a term sheet
Do not just ask, "What is the rate?" Ask these instead:
- What security is required, exactly?
- Will the lender take first registered mortgage, second registered mortgage or caveat security?
- If second mortgage, is a deed of priority required and who must consent?
- What are the establishment fees, line fees, renewal fees and discharge fees?
- Is interest prepaid, capitalised or serviced monthly?
- What is the default rate and when does it apply?
- What reports are required: valuation, QS report, feasibility, survey, title search, company search, trust deed, financials?
- What are the conditions precedent to funding?
- What is the realistic timeframe to indicative approval and then settlement?
- What is the extension policy if the exit takes longer?
If a lender or broker cannot answer those clearly, slow down.
Why businesses choose Poseidon Finance
Shane St Reynolds works across commercial finance and capital raising with a plain view of the market: many borrowers do not need a lecture; they need a lender pathway that fits the transaction in front of them. That is where Poseidon Finance stands out.
Businesses choose Poseidon because the offering matches the problems borrowers actually have:
- Range: commercial and private lending from AUD 5,000 to AUD 7.5 million.
- Security options: first mortgages, second mortgages and caveat lending.
- Use cases: development loans, bridging loans and other time-sensitive business purposes.
- Speed: fast indicative approvals when timing matters.
- Flexibility: terms designed around the deal structure rather than a one-size-fits-all credit box.
That combination matters because commercial borrowers are often dealing with deadlines that do not wait: settlement dates, refinancing pressure, cashflow gaps, urgent opportunities, or projects stalled by mainstream appetite. In that environment, the useful lender is the one that can assess the real security position and move.
The mistake I would avoid every time
The biggest mistake is shopping a transaction too early and too loosely. If you send half-formed information to multiple parties, you do not create competition so much as confusion.
Have the core file ready first:
- contract of sale or refinance summary
- current title search
- rates notice if relevant
- existing loan statements and payout figures
- company and trust structure details
- approval documents and plans if development-related
- recent financials or BAS if required
- clear exit strategy
Then ask for an indicative view based on actual facts. That is how you get meaningful comparison.
If you want broader commentary from Shane St Reynolds on law, business and public issues, there is also shanereynolds.com.au. But if the issue is funding, the practical next step is to get the lending structure assessed properly.
Get the structure right before you chase the cheapest number
If you are considering a commercial, bridging, caveat, first mortgage or second mortgage facility, start with structure, security and exit. Rate matters, but it is not the first question and often not the decisive one.
Visit poseidonfinance.com.au to explore funding options and request an indicative view. If you want the underlying lesson in print, get the revised edition of "Get a Second Opinion Before You Sign".
For a consultation, use shanestreynolds.com/contact, email [email protected] or call 08 6263 6236.