Development Finance Australia
Finance for residential developments, duplexes, townhouses, subdivisions and small to medium property projects across Australia. Get clear on the right funding pathway before the wrong lender slows the project down.
What is development finance?
Development finance is a specialised loan used to fund a property development project from site acquisition, planning and construction through to sale, refinance or completion. In Australia, it is commonly used for duplexes, townhouses, apartment projects, land subdivisions, mixed-use projects and small to medium residential developments.
A property development loan is assessed differently from a normal construction loan or commercial property loan. Lenders review the site, permits, feasibility, total development cost, gross realisation value, borrower equity, developer experience, pre-sales, construction risk and exit strategy together. The same project can receive very different answers depending on the lender pathway.
Typical borrower equity
20–35%
Cash, land equity, paid costs or verified project contribution
Common structure
Staged funding
Funds are usually released through construction progress drawdowns
Suitable for
Projects
Duplexes, townhouses, subdivisions and small to medium developments
Types of development finance and who each may suit
Site acquisition and land funding
Used to purchase or refinance the development site before construction funding is ready. Lenders assess zoning, planning status, holding costs, borrower equity and the likely path to approval. This can sit beside commercial property finance where the site has income or a broader commercial use.
Construction funding
Funds the build component after permits, costings, builder details, valuation and quantity surveyor reports are ready. Drawdowns are released in stages as work is completed. Smaller builds may suit construction finance, while multi-dwelling projects usually need development-specific assessment.
Senior debt and mezzanine finance
Senior debt is the primary development loan secured against the project. Mezzanine finance can sit behind senior debt to reduce the developer's cash contribution, but it adds cost and risk. Lenders focus heavily on profit margin, GRV, exit strategy and whether the project can absorb the extra funding cost.
Non-bank and private development lending
Non-bank and private lenders may consider lower pre-sales, faster settlements, shorter track records or more flexible structures. Pricing is usually higher than a bank, but speed and policy flexibility can matter more when the site is time-sensitive, the bank has declined or the project needs a practical funding solution.
Six factors that shape your development funding options
Development lending is project-driven. These six factors usually determine which lenders will look at the deal, how much they may fund and how hard the approval process will be.
- Total development cost — land, construction, consultants, finance costs, contingency, selling costs and GST treatment must be clear.
- GRV and valuation support — lenders test the expected end value against comparable sales and market depth.
- Borrower equity — cash, land equity and paid project costs must be verified before funding is finalised.
- Planning and permits — DA, planning permit, building permit and services status affect timing and lender appetite.
- Pre-sales and exit — banks often want stronger pre-sales. Non-bank lenders may rely more on the exit strategy and marketability.
- Developer experience — previous completed projects, builder strength and professional team quality materially affect approval confidence.
Need funding direction before you commit?
Call our finance help team today
Which lender pathway suits your development project?
Development finance is not one product. Banks, tier-2 banks, non-bank development lenders, private lenders and mezzanine funders each price and assess risk differently. The right pathway depends on project size, location, permits, pre-sales, equity contribution, time pressure and exit strategy.
| Project profile | Likely lender pathway | Common leverage focus | Key notes |
|---|---|---|---|
| Experienced developer, permits ready, strong pre-sales, metro townhouse project | Bank or tier-2 bank | Conservative LTC and GRV limits | Best pricing, strictest policy, more documentation |
| Small developer, duplex or 3–6 townhouse project, limited pre-sales | Non-bank development lender | Loan to cost and end value tested together | More flexible than banks, pricing usually higher |
| Site acquisition before permits or while DA is progressing | Land, bridging or private lender | Lower LVR against site value | Exit to construction facility must be credible |
| Short settlement, bank delay, urgent refinance or builder payment pressure | Private development lender | Security value and exit strength | Speed is the trade-off; cost must be built into feasibility |
| Developer wants to reduce cash contribution | Senior debt plus mezzanine finance | Total leverage and profit buffer | Higher cost; only suitable where feasibility can absorb it |
| Completed project needing refinance before sale or lease-up | Residual stock, refinance or investment loan pathway | Value, debt cover and exit | May link to refinance property loans or investment property loans |
| Mixed-use or commercial development | Commercial construction or specialist lender | Lease, pre-sales, valuation and end use | Often overlaps with commercial property finance |
| Bank declined but project still has a realistic exit | Non-bank or private pathway | Depends on decline reason | A decline may be a policy mismatch, not the end of the deal |
How does development finance work?
Development finance usually moves through project review, feasibility packaging, lender matching, formal assessment and staged drawdowns. The lender does not simply ask whether the borrower can repay monthly. It tests whether the project can be built, sold, refinanced or exited within the facility term.
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01Review project
- →
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02Package feasibility
- →
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03Match lender pathway
- →
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04Fund by drawdowns
Common development finance scenarios in Australia
Duplex project on owned land
A borrower owns a site with equity and wants funding to build two dwellings. The lender will assess land value, approvals, build contract, borrower contribution, likely sales values and whether the project is closer to construction finance or development finance.
Townhouse development with limited pre-sales
A developer has permits for six townhouses but only one pre-sale. A bank may be restrictive. A non-bank development lender may still consider the deal if the feasibility, market depth, builder and exit strategy are strong enough.
Subdivision with staged releases
A landowner wants to subdivide and sell lots progressively. Funding may need to cover civil works, consultants, council contributions and holding costs. Lenders will focus on permits, servicing infrastructure, lot values and release mechanics.
Bank declined development project
A project can be declined because of pre-sales, leverage, developer experience, location or policy limits. A bank decline is not always the end of the funding conversation. The right non-bank or private pathway may still be possible if the numbers are sound.
Compare your development finance options
How Property Finance Help may be able to help
Step 
01
Review the project
Tell us the site location, project type, approval status, total development cost, expected GRV, equity contribution, loan amount and timeframe. The more detail upfront, the more useful the initial review can be.
Step
02
Package and position
We look at whether the project appears closer to a bank, non-bank, private, senior debt or mezzanine pathway. We do not lend. We help organise the scenario before it reaches the wrong channel.
Step
03
Connect with a suitable finance contact
Where appropriate, we refer your enquiry to a finance contact with relevant development lending experience and access to suitable bank, non-bank or private lender channels.
Step
04
Formal assessment
The finance contact manages the formal lender process, valuation, quantity surveyor review, credit assessment, loan documents and drawdown process. Formal credit decisions sit with the lender.
Get your development project reviewed
Development finance is difficult because the right answer depends on project risk, not just borrower income. One lender may focus on pre-sales. Another may focus on GRV, LTC, permits, builder risk, developer experience or exit strategy. Property Finance Help is not a lender or broker. We help organise your scenario, identify what a lender will focus on, and connect you with a suitable finance contact where it makes sense. No product bias. No commission influence.
- Project type, GRV, cost base and approval status reviewed
- Bank, non-bank, private and mezzanine pathways considered
- Suitable for residential developments, townhouses, duplexes and subdivisions
- No obligation to proceed
- Bank declined or complex project, still worth submitting
Helena
Finance Specialist, Property Finance Help
Want to sanity-check the funding pathway?
Call us to discuss your development finance scenario. Residential, mixed-use, land, subdivision and small to medium projects Australia-wide.
