We are Brokers with a wealth of experience raising finance for Property Development loans, including residential building, commercial building, and specialised.
What is Development loan?
Property Development Finance (also known as “construction finance” or “development finance”) is a form of funding that assists with building multiple residential, or commercial properties. This form of funding is available through Australia’s banks, non-banks and private lenders.
What is Gross Realised Value (GRV)?
GRV (Gross Realised Value) is the ‘on completion’ value of a property development project. This is a common term used by many banks, and development finance providers and is used to determine how much borrowing they can extend. Most will fund against GRV, excluding GST.
What is Total Development Costs (TDC)?
TDC (Total Development Costs) is the complete sum of all the costs to purchase your development site, obtain the DA, construct (including contingency), marketing, sales as well as interest and holding costs. The TDC represents all the costs involved with completing a project.
Why You Use a Bank for Development Finance
In most cases Property Development Finance is needed if you want to build a block of units or townhouses. In the past, the only way of getting these funded would be going to see your local bank.
So you would need to go see ANZ, NAB, CBA, Westpac, St George, Adelaide Bank, Suncorp or any of the smaller banks and ask them for funding.
The banks would tell you how many pre-sales were required, the maximum TDC (total development costs) and GRV (gross realised value) and you’d be away.
In more recent times, the banks pre-sale hurdles have increased higher and higher.
For example, a major bank may want to see 50% of debt cover in pre-sales, but will only extend to 70% TDC. In other words, a developer needs to show $4m in pre-sales to cover the $8m in debt the bank was giving them.
Achieving this level of pre-sales in a slow property market can be very challenging for a developer.
How much can I Borrow?
- Multi-residential development: Borrow up to 85% of the total development costs (TDC), or up to 70% of the on completion value excluding GST.
- Max Facility Limit: Up to $15 million.
- Max term: Up to 18 months
- Repayment Source: Interest can be capitalised
- Interest/Fees: Case by case, broadly 1.50-2.50% Establishment Fee and All In rate 9.95%-11.95% pa.
- Pre-Sales: Under $8M lending, nil pre-sales. Over $8M, case by case.
- Residual Stock Lending: Yes, LVR depends on location and sponsor.
Different specialised development lenders have different interest rate structures, which can be negotiated depending on your situation and the project itself. Click to know more
Contact us:
Call: 1300 931 892
Address: Suite 7 43-45 Burns Bay Road Lane Cove NSW 2066
