Property Development Finance

A property development finance loan is a specialised lending solution designed to fund the purchase of land, construction, and completion of residential or commercial property projects in Australia. Unlike our standard commercial property loans, these loans are structured for staged drawdowns, matching the progress of your construction project and usually repaid after the project is completed. Our clients often repay the loan through the sale of the developed property.

Our development finance solutions are tailored to multi-unit residential, commercial, or mixed-use development projects, and differ from commercial construction loans due to the larger amounts involved, as well as more complex eligibility criteria than standard construction loans, which usually apply to single dwellings.

There are many factors involved in obtaining development finance, including the end value of the project, scope of the project, and the developer’s track record.

Commercial development finance typically requires a 35% deposit of the land cost, though this varies based on your experience and the project specifics, while construction costs can be funded up to 100% of the total build cost in some cases. First-time developers generally need higher deposits, while experienced developers with strong track records may access more attractive funding.

For SMSF commercial development projects, the deposit requirements are typically higher at 30-35%. 

Development finance approval typically takes 2-4 weeks from submission of a complete application, though complex projects may require up to 6 weeks. The timeline includes initial assessment (2-3 days), valuation and feasibility review (5-10 days), credit approval (3-7 days), and documentation (3-5 days).

Pre-sales requirements can extend timelines for residential developments. For faster funding needs, consider commercial bridging finance to secure sites while finalising development finance.

While 100% development finance is not common, it is possible in some cases, often where we help a client structure a finance solution that combines multiple funding sources. Options can include using existing property as additional security (cross-collateralisation), mezzanine finance to top up senior debt, joint venture partnerships providing equity, or vendor finance for land purchases.

Most of our developer clients achieve an effective 100% funding of construction costs by using owned land as an equity contribution. For commercial construction projects, some lenders offer up to 90% of total development costs for experienced developers with strong pre-sales.

While pre-commitments strengthen your application and can improve lending terms, they are not a requirement if the end product suits owner-occupiers or investors (offices, warehouses, medical suites). 

For speculative commercial developments, we find that lenders focus on location quality, your development experience, and comparable sales evidence. Mixed-use developments with residential components usually require 30-50% pre-sales. Industrial developments in established precincts often proceed without pre-sales given strong investor demand.

Property development finance is available to a wide range of applicants, including both experienced and first-time developers. Our lenders assess the project as much as the borrower, so a strong feasibility study, realistic profit margins, and a clear exit strategy matter as much as your personal track record.

You can apply as an individual, company, trust, joint venture, or through an SMSF (though SMSF development lending has additional compliance requirements — see our SMSF commercial property loans page for details).

If you’re a first-time developer, it is possible to secure funding. What we see matter most is the strength of your application: a fixed-price building contract, a detailed QS report, council-approved plans, and evidence of pre-sales or a credible sales strategy. We’ve helped first-time developers secure approval by pairing them with experienced project managers and presenting their deal in a way that gives lenders confidence.

If you’re unsure whether your project qualifies, try our development finance qualification tool above — it takes 60 seconds and gives you an indication of where you stand before committing to a full application.

Development finance is one of the most complex areas of commercial lending. Unlike a standard commercial property purchase where you’re matching a borrower to a loan, development deals involve progressive drawdowns, QS inspections, line fees on undrawn funds, and exit strategies that need to be structured from the outset. The lender you choose — and how the deal is presented — can make a six-figure difference to your total finance cost.

Here’s what we do that you won’t get going direct to a bank:

• We review your QS report before it goes to the lender. Insufficient cost breakdowns are the single biggest cause of conditional approvals dragging on for weeks. We catch these issues before submission.
• We match your project to the right lender based on your specific deal — your pre-sales position, developer experience, project size, and exit strategy all determine which lender will give you the best terms. We have access to 60+ lenders, including specialist development funders that only work through accredited brokers.
• We prepare your business plan, cash flow forecasts, and feasibility analysis at no extra cost. Most brokers don’t do this. It’s a core part of how we present your deal to lenders, and it materially improves your approval odds and the terms you receive.
• We coordinate every progressive drawdown and QS inspection through construction, so your builder is never waiting on funds and your project stays on schedule.

There is no upfront fee, and in most cases we do not charge you for our services — we are compensated by the lender on settlement. You get specialist expertise, better rates through competitive tension across multiple lenders, and a single point of contact managing your finance from feasibility through to project completion.

The biggest development finance risks are unexpected project cost overruns or delays. Changing market conditions can also be a risk if property values decline or pre-sales are insufficient to meet project costs. This is why most lenders require feasibility studies, staged drawdowns and regular progress inspections.

Financial solutions if costs overruns do occur can include utilising contingency allowances (if not already deployed), additional equity injection from the developers, mezzanine finance for smaller overruns, selling down project portions to fund completion, or restructuring to cheaper finishes where possible.

Getting the right insurance and secondary finance options in place should also be part of your planning process. 

Lenders will evaluate your development project’s feasibility through key metrics including development margin (minimum 20% on costs), debt coverage ratio (1.5x minimum), pre-tax ROI (25% minimum per annum), loan-to-value ratio (LVR) on completion (65-70% maximum), and interest coverage during construction.

They also assess market comparable sales evidence, absorption rates for the area, and your development experience weighting. Location-specific analysis particularly for Sydney, Melbourne, or Brisbane markets factors into their feasibility assessment. We find using professional feasibility software and quantity surveyor reports will strengthen your application.