Development Finance: How to Fund Your Next Project
Christian Stevens, Mortgage Broker
Published January 31, 2025, 2:10 p.m ET
Property development offers exciting opportunities for profit and portfolio growth — but it requires the right funding strategy from the outset.
Development finance works very differently to standard residential or investment lending. Whether you’re subdividing a block, building townhouses, or launching a multi-unit build, here’s how to approach your next project with financial confidence.
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🔑 Key Facts
- Development finance covers everything from small duplex builds to large multi-unit projects.
- Lenders assess the feasibility of the project, not just your personal income.
- You'll need strong documentation: DA approvals, costings, timelines, and pre-sales (for larger projects).
- Flint helps developers secure the right funding structure — from non-bank to private and construction-ready finance.
What is Development Finance?
Development finance refers to specialised loans designed to fund construction or subdivision projects. These loans are usually short-term, interest-only, and tailored to the size, type, and risk of the development.
They’re commonly used for:
- Duplex or townhouse builds
- Small-scale subdivisions
- Multi-residential apartment projects
- Commercial-to-residential conversions
How Development Loans Are Structured
Unlike standard home loans, development finance is typically released in stages and based on project feasibility, not just your income.
Key structure elements:
- Loan-to-Cost Ratio (LTC): Often 70–80% of total project costs
- Loan-to-GDV Ratio: Sometimes assessed against the end value (Gross Development Value)
- Progress Drawdowns: Funds released at each stage of construction, tied to milestones
- Exit Strategy: Lenders want to know how you’ll repay (sale of units, refinance, etc.)
What Lenders Look For
To assess a development finance application, lenders will evaluate:
- Developer experience and track record
- Project scope, timeline, and budget
- DA approval and planning status
- Pre-sales or leasing commitments
- Builder credentials and fixed-price contracts
Tips:
- Prepare a detailed feasibility report
- Work with licensed builders with past project experience
- Secure at least partial pre-sales where possible
Private vs Bank Lenders: Which to Choose?
| Feature | Private Lender | Banks & Institutional Lender |
|---|---|---|
|
Speed to Approved |
Faster |
Slower |
|
Flexibility |
High |
Moderate |
|
Rates & Fees |
Higher |
Lower (if approved) |
|
Appetite for Risk |
Higher |
Lower |
Tip: Private lending can be ideal for early-stage or time-sensitive projects. Traditional lenders suit more established developers.
📞 Planning Your Next Project? Let’s Build It Right from the Start
Flint’s development finance specialists:
- Understand how to structure complex funding for subdivisions and builds
- Connect you with lenders suited to your project scale and timeline
- Help navigate feasibility, valuation, and staged drawdowns
Talk to Flint today and get the right funding in place before the first brick is laid.
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