Funding for construction and subdivision
Development finance for residential and commercial projects.
Senior debt, stretch senior and private funding for construction. Your broker explains the line fee, the drawdown mechanics and the exit before you commit.
What is a development finance?
Development finance is short-term lending used to fund a property construction or subdivision project, drawn progressively against building milestones and repaid when the completed stock is sold or refinanced. It is assessed on total development cost, gross realisation value and presales rather than on ordinary servicing.
Development lending is priced and structured around a project rather than a borrower. Lenders test the total development cost against gross realisation value, the developer’s track record, the builder’s capacity and the exit strategy. Common parameters are up to 65% of GRV or 75–80% of total development cost, whichever binds first, with the developer contributing land equity and often cash on top of it.
Funds are drawn in stages against a quantity surveyor’s progress certificates, so the facility grows as the build advances and interest is charged only on what is drawn. Interest is usually capitalised into the facility rather than paid monthly, which means no repayments during construction but a larger balance at completion. Presale requirements vary: banks may want 60–100% debt cover from qualifying presales, while private and non-bank lenders will fund with fewer or none at a materially higher rate.
The exit is the part to get right. A development loan typically runs twelve to twenty-four months and must be repaid from settlements or a refinance onto a term facility. Delays in construction, certification or settlement create extension fees and can force a distressed sale. Your broker stress-tests the timeline and pricing assumptions, and will say plainly when a project does not stack up.
Development finance at a glance
| Amount | $500,000 – $50,000,000 |
|---|---|
| Term | 6–36 months |
| Rate type | Variable |
| Indicative rates (Q3 2026) | 7.5% – 10% p.a. · see rate history |
| Security | Secured by property |
| Repayments | Interest capitalised during construction, principal repaid at settlement |
| Typical speed | 4–12 weeks depending on lender and project complexity |
| Best for | Experienced developers with a feasible project, real equity and a credible exit |
| Consider something else if | First-time developers without a builder, a feasibility study or land equity |
| Tax | Development interest and costs are generally treated as part of the cost of the project. Get specific accounting advice on GST margin scheme and trading stock treatment. |
Advantages
- Interest capitalised, so no repayments during construction
- Drawn progressively — you pay only on funds used
- Private and non-bank options where presales are limited
Trade-offs
- Expensive relative to term property lending
- Line, establishment and QS fees add materially to cost
- Delays trigger extension fees and can force a discounted sale
How to apply for a development finance
- 01
Feasibility and equity
Total development cost, gross realisation value, your land equity and cash contribution, and the project timeline.
- 02
Match the funding tier
Your broker weighs bank senior debt, non-bank stretch senior and private funding against your presale position and required speed.
- 03
Draw, build, exit
Funds release against QS certificates through construction, then the facility is repaid from settlements or refinanced.
Documents lenders commonly ask for
- Feasibility study and development budget
- Development approval, plans and the fixed-price building contract
- Developer track record, presale contracts and a valuation on an as-if-complete basis
Lenders we compare for this
Pepper Money, Macquarie, Westpac, NAB and others on our panel. See the full panel.
Estimate your repayments
- Number of repayments
- 36
- Total interest (est.)
- $10,734
- Total repaid (est.)
- $85,734
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is development finance?
Development finance is short-term property lending used to fund construction or subdivision. Funds are drawn progressively against certified building milestones and the loan is repaid from the sale or refinance of the completed project.
What is gross realisation value?
Gross realisation value is the total expected sale value of a completed development, usually assessed by an independent valuer. Lenders cap borrowing at a percentage of GRV, commonly around 65%, as a primary risk control.
What are presales in development finance?
Presales are unconditional contracts on units or lots signed before construction begins. Bank lenders often require presales covering 60–100% of the debt; non-bank and private lenders may reduce or waive that requirement at a higher rate.
What is capitalised interest?
Capitalised interest is interest added to the loan balance during construction instead of being paid monthly. It removes repayment pressure while there is no project income, but increases the amount owing at completion.