Private finance across the property development cycle

Development is a sequence of funding gaps

A development project moves through stages, and each stage has its own funding problem. The site must be secured before a bank will look at it. Approvals take longer than planned. Construction lenders want pre-sales and equity. Builders fail or costs rise. Units are finished but not all sold when the construction facility matures. Then the next project needs a deposit while capital is still tied up in the last one.

Private secured finance is designed for these gaps. It focuses on the property and the exit, so it can move at the pace developers need.

Stage by stage

Stage	Typical funding gap	Page
Site acquisition	Bank will not fund unapproved land	Development site purchase
Planning	Land loan expiring before approval	Land awaiting rezoning or DA
Construction	Builder failure or cost blowout	Part-complete development
Completion	Unsold stock when the construction loan matures	Residual stock loans
Next project	Deposit needed while equity is tied up	Equity release loans

What lenders look for in developers

• Track record. Completed projects, even small ones, build confidence.
• Feasibility. Realistic yield, costs, sales prices and margin.
• Security. Land, completed stock or other property; additional security often strengthens land deals.
• Exit. A clear next step: construction lender, buyer for an approved site, or sales evidence for completed units.
• Tax position. GST on sales, margin scheme use and any outstanding liabilities.

No valuation is needed before approval; the lender relies on comparable sales and the project’s specifics.

Talk to us about the next stage of your project before the funding gap opens.

Capitalised interest and holding costs

Development land and unsold stock generally produce little income, so most development-related private loans capitalise interest. Budget carefully: rates, land tax, insurance and strata levies on completed stock continue regardless. Our guide on residual stock strategies covers holding costs and sell-down planning in detail.

An illustrative developer

Illustrative only. A developer completes a twelve-lot subdivision. Nine lots settle, three buyers fall through, and the construction lender wants repayment. A residual stock loan over the three lots repays the lender and releases a modest amount towards the deposit on a new site. The remaining lots sell over five months, each settlement repaying part of the loan, and the developer secures the next site without waiting for the last lot to sell.

Common pitfalls

• assuming best-case approval timelines and sales rates
• under-budgeting holding costs
• relying on one exit without a backup
• tying all equity into one project with no buffer
• forgetting GST on new residential sales when calculating returns

Working across several projects

Many developers have projects at different stages at once. Cross-security, such as using completed stock to support a new site acquisition, can work well but needs careful release terms so each project can proceed independently. Discuss the whole pipeline with your specialist, not just the project in front of you.

Joint ventures and capital partners

Many developers bring in a capital partner or joint venture to share risk and fund equity. Private secured finance can sit alongside these arrangements, for example funding a site purchase while the joint venture agreement is finalised, or repaying a partner who wants to exit early. Lenders will want to see the joint venture documents and understand who controls decisions, who provides security and how profits and losses are shared. Clear documentation avoids delays and protects every party.

Small developers and first projects

Not every developer is a large group. Many are builders taking their first step into development, families developing a block they have owned for years, or investors converting a single site into townhouses. Private lenders consider these developers too. The questions are the same: is the land worth what you say, is the plan realistic, and how will the loan be repaid? A first project with a modest scale, a sensible feasibility and good additional security is often very financeable.

Talking to construction lenders early

If your exit is construction finance, talk to construction lenders before you buy the site or lodge the application. Understand their pre-sale requirements, the equity they expect and the costs they will fund. That conversation shapes your design, your sales strategy and the term of any private holding loan. A holding loan whose term is set around a construction lender’s real requirements is far less likely to need extending.

GST and the margin scheme

New residential premises sold by a developer generally attract GST, and the margin scheme may be available in some circumstances, calculating GST on the margin rather than the full price. The choice affects your feasibility and your buyers. Get specialist tax advice early, and factor GST into every sales and release calculation.

Funding that keeps the pipeline moving

Developers need lenders who understand that projects rarely run exactly to plan. Tell us about the site or project, its stage, the security available and the exit, and a specialist will tell you how private finance can carry it to the next step. There is no credit check when you first enquire, your details are not circulated, and an honest feasibility helps us respond with confidence. Start a development enquiry.