Private lending › Development finance
Property development
finance.
Site acquisition, construction facilities, mezzanine capital behind a senior lender, and residual stock loans against completed unsold dwellings. Placed with lenders who read feasibilities properly.
Get indicative terms
Same day, in writing. No credit check to enquire.
The basics
What development finance is
Development finance funds a project across its lifecycle rather than lending against a static asset. The facility is drawn progressively as work completes, and it is repaid from sales or a refinance once the project is finished.
That structure is why development lending is assessed differently to a mortgage. The lender is underwriting a feasibility: land cost, construction cost, contingency, professional fees, holding costs, and the end value the completed project will achieve. If the numbers work with room to spare, the loan works.
The gap between bank and non-bank development lending is wider than in any other category. Banks typically want substantial presales, a tier-one builder and a long track record. Private and non-bank funders will look at projects with limited presales, smaller builders and developers on their second or third project, and price accordingly.
Facility types
What we arrange
- Site acquisitionFunding to secure the land, often before a DA is granted. Priced against as-is value rather than end value.
- Construction facilityDrawn progressively against a quantity surveyor's reports as stages complete. The core of most development deals.
- Mezzanine capitalSits behind a senior construction lender to fill an equity gap. More expensive, but it can be the difference between a project proceeding and stalling.
- Residual stockAgainst completed but unsold dwellings, typically to repay a construction facility that has hit its expiry before the sales campaign finished.
Typical structure
The gap between bank and non-bank development lending is wider than in any other category. Banks typically want substantial presales, a tier-one builder and a long track record. Private and non-bank funders will look at projects with limited presales, smaller builders and developers on their second or third project, and price accordingly.
Credit appetite
What lenders assess
The feasibility
Land, build cost, contingency, fees, holding costs and gross realisation. Lenders test whether the profit margin absorbs a cost overrun or a softer market.
Presales
Banks usually require them. Non-bank lenders will consider limited or no presales, with pricing and leverage adjusted to match.
The builder
A fixed-price contract with a solvent, appropriately licensed builder de-risks the project more than almost anything else you can present.
Your experience
A first project is fundable. It is priced differently to a developer with five completions behind them, and being upfront about which you are saves time.
What slows deals down
Incomplete feasibilities, no quantity surveyor report, and cost assumptions that have not been updated for current build pricing. Bring those three and a development enquiry moves in days rather than weeks.
Terms
Development parameters
Development pricing varies more widely than any other product we place, because the risk profile of a fully presold townhouse project and a speculative englobo subdivision are not comparable.
| Rates | From 8.49% p.a. |
|---|---|
| Establishment fee | From 0.75% |
| Line fees | From 0%* |
| Term | 3 – 60 months |
| Maximum LVR | Up to 80% |
| Facility size | $200,000 – $100m+ |
| Locations | All of Australia |
| Indicative terms | Same day |
*Line fees from 0% are available on selected facilities. Whether a line fee applies, and at what rate, depends on the lender, the structure and the term. Not every project or applicant will qualify.
FAQ
Frequently asked questions
How do you finance property development?
Development is typically funded with a facility drawn in stages as construction progresses, secured by a mortgage over the site and repaid from settlements or a refinance on completion. Lenders assess the feasibility rather than your income, testing land cost, build cost, contingency, fees and the gross realisation of the finished project.
How does property development finance work?
The lender approves a total facility based on the feasibility, then releases funds progressively against quantity surveyor reports as each stage completes. Interest is usually capitalised into the facility rather than paid monthly, and the whole amount is cleared when the project sells down or refinances.
What is property development finance?
It is finance structured around a construction project rather than a completed asset. It covers site acquisition, construction costs and sometimes the equity gap between what a senior lender will advance and what the project needs.
How do I raise finance for a property development?
Bring a complete feasibility, a fixed-price building contract, a quantity surveyor report and evidence of your equity contribution. Those four documents determine both whether the project is fundable and what it costs. We then place it with the lenders whose current appetite matches the project type and location.
Can I get development finance with no presales?
Often yes, through non-bank and private lenders. Banks generally require presale coverage. Removing that requirement costs more in rate and usually means lower leverage, but for smaller projects it is frequently the difference between proceeding and not.
What is a residual stock loan?
A loan secured against completed but unsold dwellings in a finished development. It is most commonly used to repay a construction facility that has reached expiry before the sales campaign has finished, so the developer is not forced into discounting stock.
What is mezzanine finance?
Funding that sits behind the senior construction lender in priority and fills the gap between the senior facility and the developer's own equity. It is more expensive because it is repaid last, and it is assessed on the strength of the project rather than the borrower.
Enquire
Send us the feasibility.
Site, build cost, end value and your equity position. Indicative terms the same day where the numbers are complete.
Prefer to talk it through? Call 0478 715 429.