Senior debt
What is the main facility?
The primary construction facility, sized against total development cost and the project's end value, drawn down progressively against certified claims.
DEVELOPMENT
Funding for projects, not just properties
Development finance is assessed on the feasibility of the project. The numbers behind it decide almost everything.
IN SHORT
Development funding is lending against a project's feasibility
A lender considering a development is not really assessing a property — it is assessing a plan. The key measures are total development cost, the projected end value of the completed project, and the margin between them.
Facilities are usually drawn progressively against certified progress claims, with interest capitalised into the facility and repaid on settlement of completed stock or on refinance to a term facility.
Requirements tighten quickly with project size and complexity. Presale levels, builder quality, and the developer's own track record all move the terms available.
WHY IT HELPS
What we help with
Feasibility review
Do the numbers hold together?
Before approaching a lender, it is worth stress-testing the feasibility. A project that only works on optimistic assumptions will not survive credit assessment.
The exit
How does the facility get repaid?
Through settlement of completed stock, or refinance to a term facility where the project is being retained. Lenders assess the exit as closely as the build.
HOW IT WORKS
What lenders examine
Development credit is conservative and detailed. Most declines come from feasibility that does not withstand scrutiny, or from a builder or contract the lender is not comfortable with.
- Total development cost, including land, construction, consultants, holding costs and contingency
- Independent quantity surveyor and valuation reports
- Presale levels, where required, and the quality of those contracts
- The builder's financial standing, track record and insurances
- The developer's experience with projects of comparable scale
IS IT RIGHT FOR YOU
Where development finance is achievable
This tends to suit you if
- The feasibility has real margin — enough to absorb cost movement and still work.
- You have a relevant track record — completed projects of similar type and scale.
- The builder is credible — appropriately licensed, insured and financially sound.
- The exit is clear — presales, or a demonstrable path to a term facility.
Worth weighing up
- Equity requirements are substantial — developers contribute meaningfully to total development cost.
- Presales may be required — particularly for larger residential projects.
- Costs and timelines move — and contingency is the difference between tight and failed.
- It is not a first project product — first-time developers face a much narrower lender market.
Development finance is complex, higher-risk lending. Terms, costs and availability vary widely between lenders and with market conditions. Nothing here suggests a particular project can be funded.
How working with us actually goes
Step 1
We start with a conversation, not an application
Step 2
We work out what you can borrow and what it costs
Step 3
We prepare the application and deal with the lender
Step 4
We stay across the loan long after settlement
COMMON QUESTIONS
Questions we get asked about this
How much equity does a developer need to contribute?
Lenders expect a meaningful developer contribution to total development cost, and the proportion varies with project type, scale, presales and the developer's experience.
Land already owned at a favourable cost base often forms part of that contribution.
Are presales always required?
Not always, but they are commonly required for larger residential projects, and the required level varies by lender and market conditions.
Some lenders will consider reduced or nil presale structures at more conservative gearing and higher cost.
What is mezzanine finance?
Mezzanine or stretch funding sits behind the senior debt and lifts total gearing, allowing a developer to contribute less equity.
It is more expensive, reflecting its subordinate position, and it needs to be weighed carefully against the project margin it consumes.
How is interest handled during construction?
Interest is usually capitalised into the facility rather than paid from cash flow, since the project produces no income during the build.
That capitalised interest forms part of total development cost, so delays feed directly into the feasibility.
Can a first-time developer get funding?
It is harder, and the lender market is narrower. Some lenders will consider a smaller first project, particularly where the developer has relevant construction or property experience and a strong builder.
Terms will generally be more conservative than for an experienced developer.
RELATED
Where people usually go next
GET IN TOUCH
Tell us about the project and where it currently sits.
Would rather talk it through?
(02) 9659 1694Important information
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.