Property Development Loans

How property development loans work

Property development finance can fund projects such as duplexes, townhouses, apartments, land subdivisions and mixed-use or commercial developments.

Unlike a standard property loan, approval is based on both the borrower and the project itself. Lenders may assess:

• Your development experience and financial position

• The purchase price and value of the development site

• Planning approvals and building documentation

• The construction contract and builder

• Total project costs and contingency funds

• The expected completed value

• Your available equity or cash contribution

• Any presales required by the lender

• How the loan will be repaid when the project is complete

Development funding is generally released progressively as construction reaches agreed stages. A lender may require reports or inspections from a quantity surveyor or valuer before releasing each payment. Interest will generally apply to the amount drawn, although the structure varies between lenders and facilities.

Once construction is complete, the development loan is usually repaid from property sales or refinanced into another facility. If completed properties remain unsold, residual stock finance may be available, subject to the lender’s assessment.

Development finance carries additional risks, including construction delays, cost overruns, valuation changes and slower-than-expected sales. A realistic feasibility, appropriate contingency allowance and clear repayment strategy are important before proceeding.

The property development finance process

1. Initial project review

We’ll discuss the site, proposed development, planning status, project budget, timeframe, experience and intended repayment strategy.

2. Feasibility and funding assessment

We’ll review the land cost, construction costs, professional fees, contingency allowance, expected completed value, available equity and any proposed presales. This helps establish the likely funding requirement.

3. Lender comparison

We’ll identify suitable lenders from our panel and compare their indicative loan amounts, equity requirements, presale conditions, interest rates, fees and project criteria.

4. Application and due diligence

Once you select an option, we’ll prepare the finance application and coordinate the required documents. These may include the feasibility, development approval, building contract, plans, valuations, quantity-surveyor reports and presale information.

5. Approval and construction funding

We’ll work through the lender’s approval conditions and loan documentation. During construction, we’ll help coordinate progress-payment requests, valuations and lender communication as funds are released.

6. Completion and repayment

When construction is complete, the development loan will generally be repaid through property sales or refinanced. If properties remain unsold, we can explore whether a residual stock facility may be available.

We’ll remain your point of contact throughout the finance process, keeping the requirements, deadlines and next steps clearly explained.