Property Development Funding

What is property development finance in Australia?

Property development finance is a short-term loan type that provides funding for the development of property. Development of property also refers to construction projects, the purchase of land, property renovation and many others. Finance for property development can refer to a type of loan that allows a borrower to get funding for the construction of more than one property on one title.

Both residential and commercial properties are eligible for a property development loan. Banks and lenders categorise residential and commercial property development into two, as these properties typically have different approval processes, fees and charges, and interest rates and risk assessments.

Residential property development of up to four units can be considered a smaller-scale development. This type of mortgage has its own standard fees and charges and is considered the less risky of the two.

Commercial property development refers to property development for more than four or five residential units or anything from a skyscraper to commercial properties. The mortgage applications for this type of property are more complex and will most likely attract a higher interest rate to protect the bank or the lender.

Property development funding often offers staged payments during the end of each building stage with the borrower’s ability to borrow the ongoing interest as part of the package. The amount of funding depends on the site’s current value, the build costs and the gross development value.

To know if your site is eligible for funding for property development, we recommend talking with an experienced property development finance broker. 

At Professional Lending Solutions, we are focused on tailoring mortgage solutions to the needs of every client by providing specialist support and consistent communication during every step of the loan process. Contact us and we will find the best solution for you.

What is my borrowing capacity for development loans and funding?

The borrowing capacity you can achieve for property development funding and loans will vary depending on the property development criteria that you are required to meet. This will vary from lender to lender and will also depend on the proposal. The quickest way to learn your borrowing power for property development funding is to chat with us! We can assess your goals and finances and calculate your borrowing power.

When should you consider property development finance?

Large-scale property development projects are more suited for property development loans in Australia, as opposed to smaller-scale projects. 70-80% of the building or construction cost is covered by the funding, while the remaining cost is from the borrower.

What are the features and benefits of property development?

The characteristics of a property development loan may seem similar to a Construction Loan although they are significantly different. A construction loan is suitable for a building or a house for residential purposes or as an investment property. But a property development loan has its own features and benefits that set it apart from other types of mortgages:

Features of property development funding

  • The maximum loan amount is 80% of LVR
  • Only hard costs are covered
  • Possibility of maximum return on investment possibilities

Benefits of getting funding for property development

  • The property that requires funding will not be considered collateral
  • Stability is ensured–there are no rental fluctuations
  • The loan stays competitive by the rate of interest
  • Interest payments are tax-deductible so your cash flow remains manageable

To know if your project qualifies for a property development loan, contact us at Professional Lending Solutions. Our team of highly experienced development funding brokers see to it that each one of our clients gets customised loan solutions tailored to their specific needs, every single time. We look forward to doing the same for you.

What do lenders look for when funding property development?

These criteria need to be fulfilled to be qualified for funding:

  • The borrower should not be a minor
  • Registered Mortgage in the context of property “to be developed”
  • The borrower must be an Australian Citizen, an Australian immigrant or PR Holder
  • The property must be commercial or residential
  • Proof of construction contract, land purchase contract
  • Build cost, preferred LVR and security (but not in all cases
  • An Australian Business Number (ABN)

Make Confident Decisions with Professional Lending Solutions Gold Coast

With a full range of different lenders on our panel, we can find the best deal for the funding of your property development and construction development loans. Finance for property development generally operates as an interest-only, progressively-drawn facility to finance as required.

Often, the interest on the construction development loans or funding is capitalised during the development period, with the entire loan inclusive of interest charged being repaid upon the sale of the development and or the refinance of any residual debt. When you work with us to finance your property development project, we will sift through the unnecessary steps to keep your finance on track.

For a full overview of your borrowing capacity for land or property development on the Gold Coast, chat with one of our development funding experts at Professional Lending Solutions today. Submit your information in the Loan Enquiry box below and we will get back to you very soon.

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