Development Finance Resources
Expert insights and plain-English guides to help you navigate property development financing in Australia.
Finance Types
Senior Debt
The most common form of development finance — first mortgage, secured over the project, providing the bulk of funding. LVR typically 60–70% of project costs. Lower interest rates (6–8% p.a.). Requires detailed project documentation and progressive drawdown aligned with construction.
Mezzanine Finance
Second-mortgage capital that bridges the gap between senior debt and developer equity. LVR typically 70–85% of GRV. Higher rates (12–18% p.a.) in exchange for subordinated security. Reduces the cash equity required from the developer.
Preferred Equity
Entity-level capital that sits behind senior debt without requiring a second mortgage — useful where the senior lender prohibits second mortgages. LVR up to 90%.
Site Loans
Short-term finance to secure a development site while DA and construction funding are arranged. Typically 12–24 months against site value.
The Application Process
- Preliminary Assessment — We review your project feasibility, equity position, pre-sales and timeline.
- Lender Matching — We identify bank and non-bank lenders suited to your project and present indicative terms.
- Formal Application — We compile and lodge the full credit application, including valuations and due diligence.
- Settlement & Drawdowns — Facility settles and progressive drawdowns are made against certified construction claims.
Key Terms
- LVR (Loan to Value Ratio)
- The loan amount as a percentage of the project's Gross Realisation Value (GRV). Development finance is typically assessed at 65–80% LVR.
- LTC (Loan to Cost)
- The loan amount as a percentage of total project costs (land + construction + finance). Lenders cap facilities against both LVR and LTC.
- GRV (Gross Realisation Value)
- The total expected sale proceeds from all units or lots in the completed project. This is the primary benchmark for development finance sizing.
- Presales
- Unconditional contracts to purchase units before construction begins. Banks typically require presale coverage; non-bank lenders often do not.
Frequently Asked Questions
- What does LVR mean in development finance?
- LVR (Loan to Value Ratio) is the loan amount as a percentage of the project's value — in development finance, usually measured against the Gross Realisation Value (GRV) of the completed project.
- What is LTC (Loan to Cost)?
- LTC measures the loan amount against total project costs (land plus construction plus finance costs). Lenders cap facilities against both LVR and LTC.
- How does the development finance application process work?
- Typically four steps: preliminary assessment of your project's feasibility, lender matching and indicative terms, formal application with valuations and due diligence, then settlement and progressive drawdowns during construction.
- What are presales and why do lenders require them?
- Presales are contracts to buy units before completion. They de-risk the project for lenders by demonstrating market demand and guaranteeing sale proceeds to repay the facility.
Get expert guidance from our team