Property Development Finance
We can approve loans quickly
Financing for property development tailored to your needs
Up to 90% of the total cost of property development
Solutions for creative funding
Options for flexible interest payments
Cost-effectiveness Residential and Commercial Funding
A lower requirement for pre-sales of construction loans
Equity release at an early stage
Expertise and networks
Mezzanine Property Development Loans
Table of Contents
- What is Property Development Finance?
- How does Property Development Finance work in Australia?
- What are the benefits of Property Development Loans?
- Top Property Development Finance Sources
- Alternatives of Property Development Funding
- How to Get Property Development Loans from Private Lenders in Australia?
- Difference between Private Lending Finance and Bank Finance
- Case Study: Property Development Loan for a Real Estate Firm in Melbourne
- Case Study: Development Finance for a Sydney-Based Builder
- Frequently Asked Questions (FAQs)
What is Property Development Finance?
Property development finance is a form of finance that allows developers to get financing to develop, construct and sometimes refurbish the property. Property development finance may be used for all or part of the total cost of a project.
It is also referred to as a bank loan, the process of applying for and obtaining a lending facility from banks to fund the construction of new commercial properties. The typical terms of interest and security are set out in the relevant agreement, but all applicants must meet certain minimum requirements, which vary by province in Australia.
How does Property Development Finance work in Australia?
In Australia, Property development finance works when the owner of a property wishes to expand or build their portfolio. It is a process where the property developer finances the project from start to finish, including any necessary alterations and additions.
Australia has a land of prospering development opportunities. Within the past few decades, securing property development finance has become a popular choice. Despite the unchanged terms for development finance, people are more drawn to this sector every day. The term construction or development can have multiple meanings. It can indicate a building partially or fully constructed; It can also mean townhouses, apartments, complexes, and commercial buildings.
Basic finance offers excellent and incomparable services in property development finance. There are two types of property development financing: the one offered to you by streamlined banking institutions and the other option is private lenders.
What are the benefits of Property Development Loans?
- Less paperwork and hassle involved
- Unlike banks, you don’t need to fulfill the presale requirement
- Less or no minimum equity
- Absolutely no Credit checks
- A none-to-few exposure in the property development is required
- Quick approvals with settlements at the same pace in every region of Australia
- No additional term of repayment is specific to the project requirements
Top Property Development Finance Sources
A type of financing that requires a minimum of two and more businesses or individuals to agree to manage and run a single venture. Both parties contribute funds as well as land or equity in the undertaking. However, It is essential to consider financing as a core element of project funding. It’s mandatory for lenders to evaluate the obligations of the partners in the joint venture.
A type of financing similar to joint ventures, Syndicate financing is a group of lenders known as syndicates – that work together to provide funding to one customer. Syndicate members are unit owners like a trust or private company. The syndicate can finance multiple projects simultaneously. The combined assets of the syndicate might mean that more prominent projects can be executed with maximum potential returns. Every member of the syndicate has absolute privileges to explore the project before funding.
Lenders are called private lenders in Australia. They mainly evaluate a proposed project based on its merits. After getting details of the confidential memorandum, the lender then decides the next course of action. Whether to provide a complete or portion of property development finance.
Non-Conforming Lenders; In the dynamic market of Australia, every lender’s working norms differs from one another. From your int leading practices to charters and regulations, lenders have different approaches to funding projects. Lenders that have varying regulations compared to the development market are known as non-conforming lenders.
Property Development Leases
The most suitable way (and safe) way for a landowner to receive offers for an unencumbered land parcel is a development lease. The landowner can also approach if the property requires development but the landowner does not have sufficient funding. Under a property development lease, the landlord permits the details of the document and then the developers put a mortgage on the property.
In an equity partnership arrangement, a person is mostly involved as the supplier and offers a portion of the finance. This portion of the project is his equity, using the labour capital or as a shareholder within the undertaking. The supplier agrees to provide either the cash flow for the project or the equity through the mortgage guarantees on acceptable terms and conditions.
Already made up your mind? Awesome.
Contact us and we will make the process very simple and easy for you!
With flexible options up funding is possible in 24 hours
Alternatives of Property Development Funding
The following are two primary alternatives to property development finance in Australia:
- Total development cost (TDC)
- The gross realisation price (GRV)
Total Development Cost (TDC)
It is the total amount paid for property development. It includes the actual interest in property development with the cost involved in the purchase and construction of property holding fees, insurance council fees, marketing, and sale of the property, respectively.
Gross Realised Value (GRV)
GRV is calculated based on certain factors to get an estimated value of any ongoing or yet-to-develop project. Lenders show more interest in financing the project in GRV than any other entity. To get approval for a large amount, you need to understand that the top-notch construction is done under the material used in the project.
Besides the type of project (home or commercial project), the location and marketing paradigms also play a significant role and have an impact on the GRV.
How to Get Property Development Loans from Private Lenders in Australia?
There are hundreds and thousands of lenders in Australia who offer private property development loans. Lenders can be private people or companies offering lending services to bridge the gap in loans. Typically property development loans are provided for a short term of two (2) years. Private lenders are mainly not concerned if it’s the first project to develop the property or if you have less exposure to the field. However, banks consider such small details to determine eligibility for loans. It is vital to seek all the development approvals from required government authorities well before submitting the application.
Difference between Private Lending Finance and Bank Finance
Case Study: Property Development Loan for a Real Estate Firm in Melbourne
One of our developers’ clients approached a well-known bank to acquire property development finance for a multi-residential apartment project in Melbourne. The bank, after a detailed assessment, proposed the terms to the client that it will offer a loan of up to a total development cost (TDC) of 70 percent and put a condition once 45 percent of units will get pre-sold.
These terms are absolutely awful and irritate the client. Disappointed, he approached us and requested the loan. Our team of experts approved his property development loan to 89% percent of TDC from one of our private lenders without any pre-sale conditions. It helped him to start the development on time. All the construction was completed within 16 months and with great satisfaction.
Case Study: Development Finance for a Sydney-Based Builder
Frequently Asked Questions (FAQs)
What is the process to apply for Property Development Finance?
The process to apply for Property Development Finance in Australia is fairly simple. There are three main stages:
- First, you need to complete the application form with supporting documents.
- Next, you will receive a quick response from us. We respond to most clients in minutes.
- We will understand your problem and advise the best solution accordingly. Most settlements are done within 1-2 days.
How many types of Property Development Finance are there?
There are several different types of property development finance available, including:
- Commercial Property Development Finance: This type of financing involves purchasing land or other properties with the aim of developing them into commercial properties such as shopping centres or office blocks.
- Residential Property Development Finance: This type of financing is used to buy existing homes, renovate them, and then sell them off at a profit.
- Development Finance: This type of financing involves buying land and developing it into a new residential or commercial building for a client who wants to develop it themselves.
Where Can I Utilise the Property Development Finance?
Property development finance can be used for all types of projects, such as:
- Apartment buildings
- Retail stores
- Residential properties
What is Gross Realised Value (GRV)?
It includes all assets such as land, buildings, machinery, and equipment. Gross realisable values are usually higher than current market prices because they include future costs to dispose of these assets.
Talk to a business lending specialist
Leave your details below and one of our Business Lending Specialists will get in touch right away.