Property Development Finance: Broker Requirements

Property development finance funds a site or project that a developer will sell, lease or retain as an investment. To assess it, connect the proposed debt to the approved works, the money needed to finish and the proceeds available to repay it.

For an Australian mortgage broker, a profitable feasibility is only the starting point. A project can show a profit at completion and still run out of money before the next construction payment.

Before seeking terms, collect the site details, ownership records, planning position, cost budget and sponsor’s financial information. Then work through the assessment in this order.

1. Classify the project and its repayment source.
2. Verify site control and the planning position.
3. Build a dated feasibility and test adverse changes.
4. Match equity and contract evidence to the funding shortfall.
5. Establish construction controls and drawdown requirements.
6. Prove how the debt will be repaid, including any bridge or joint-venture arrangement.

Classify the Development

Classify a development by what will be built, how the developer will use it and where repayment will come from. Record the address, number of dwellings or lots, proposed uses and borrowing entity. Include the owners and their development experience.

Include the intended sale or hold strategy. A townhouse project sold dwelling by dwelling has a different repayment path from apartments retained for rent. An industrial building leased to a tenant needs lease and investment-finance evidence as well as a construction budget.

Project	What the assessment must connect	Likely funding route to assess
Residential development	Housing or subdivision costs to completed-home or lot sales, or a rental hold	Property-development or commercial construction facility
Commercial development	Building costs to commercial sales, leases or retained investment income	Commercial property-development facility
Mixed-use development	Separate residential and commercial assumptions to one project budget and repayment plan	Facility accepting the full mix, with component valuations and exits
One home built or renovated for personal occupation	The borrower’s household finances to staged building payments	Residential construction lending

Incorrect classification: a six-townhouse project for sale is assessed as one owner-occupied home because the security starts as residential land.

Correct classification: the six-townhouse file records development costs, sponsor equity, project controls and sale proceeds. The borrower building a personal residence follows the residential construction requirements instead.

CommBank’s commercial property banking page, as at October 2026, includes residential and commercial developments alongside land subdivisions. Its listed project types establish a funding route, not approval for an individual site.

Housing development finance includes funding for residential site acquisition, subdivision and dwelling construction. A dedicated community-housing programme has its own eligibility rules.

Housing Australia’s Affordable Housing Bond Aggregator loans, as at October 2026, fund registered community housing providers, including construction projects. An ordinary private developer doesn’t qualify merely because the project creates housing.

Keep the project separate from its builder’s operating-business finance. The construction business loans guide covers that separate assessment.

Verify Site and Planning Position

Verify that the client controls the site and that the proposed works fit its planning position before using the completed value in a finance request. Site control can be an existing title, a signed purchase contract or another legally documented interest.

Ask the client’s lawyer to identify the legal owner, existing mortgages, easements, access rights and contract conditions. An option or joint-venture contribution needs a clear explanation of how the borrowing entity obtains the rights required for development.

Have the planner confirm the permitted use and applicable approval pathway. Record issued approvals, approved plans, conditions, expiry dates and anything still needed before work can start. Separate an application lodged with an authority from an approval already granted.

For example, the New South Wales section 10.7 planning certificate guidance describes zoning and planning controls. It also identifies constraints including contamination, flooding and bushfire-prone land. Use the relevant state or territory’s records for the actual site.

Give each unresolved site matter an owner and a budget or timing consequence. The authority or planner confirms planning conditions.

Service providers and engineers confirm service capacity and access works. Environmental specialists assess contamination, while the valuer considers the resulting constraints on value.

The lender decides whether the security and approval position meet its facility conditions. If a service upgrade remains unpriced, add the cost investigation to the feasibility before treating the build budget as complete.

Build and Stress the Feasibility

Build a feasibility that shows every project cost and receipt on the date it is expected to occur. A total profit figure doesn’t show whether the developer can meet payments during construction.

Reconcile the land purchase and existing debt with acquisition costs, construction, professional fees, service works and approval costs. Add finance charges, contingency, selling costs and the client’s adviser-confirmed tax assumptions. Keep costs already paid separate from costs still payable.

Show the source and date for each assumption. Signed contracts, current quotations and valuation evidence carry different weight from the developer’s estimates. Have the client’s accountant confirm tax amounts and payment timing without assuming a particular tax treatment.

A Hypothetical Funding Stress Test

Consider a hypothetical project with $4,000,000 of remaining cash costs, including assumed finance charges and contingency. The sponsor has $1,000,000 available, leaving $3,000,000 to fund. Assume the requested facility can supply that amount after its deductions.

The project expects $4,500,000 of net sale receipts after the modelled selling and tax amounts. At the assumed exit, those receipts repay $3,000,000 of debt and leave $1,500,000 before returning the sponsor’s $1,000,000 contribution. The resulting $500,000 surplus is a model outcome, not a lender offer.

Now assume remaining costs rise by $200,000 and delay adds $60,000 of finance charges. If the facility stays fixed, the sponsor needs another $260,000 before completion. If extra debt funds the increase, repayment debt becomes $3,260,000, subject to lender approval.

A 10% fall in the assumed net sale receipts reduces them to $4,050,000. After repaying $3,260,000, only $790,000 remains. The original $1,000,000 contribution is then short by $210,000, before any other distributions.

Test the changes separately and together. Move settlement dates, increase construction costs, reduce sale prices and change the assumed interest rate.

For a hold strategy, reduce rent and extend vacancy too. Report the peak cash shortfall, revised debt at exit and cash remaining after repayment.

If the stressed debt exceeds expected refinance proceeds, identify the cash contribution or alternative sale needed to repay it. An assumed facility increase or extension isn’t an available source of funds.

Structure Equity and Presales

Structure the funding by showing what the sponsor contributes, when it becomes available and what debt remains after that contribution. Raising finance for property development starts with the documented shortfall, then matches it to a lender accepting the project and exit.

Reconcile land value with existing secured debt and settlement costs before describing land equity as available funding. Cash already spent on consultants isn’t cash available for the next builder payment. Record how the selected lender recognises each contribution and when it must be provided.

Compare a bank development facility with an available non-bank or private-credit proposal on the same budget. Record the legal lender, security priority, net funds available, fees, interest treatment, term and repayment conditions.

Carry those facts into the feasibility. The private credit loans guide covers the facility identity and terms in more detail.

Loan-to-value ratio (LVR) compares debt with the lender’s accepted security value. Loan-to-cost ratio (LTC) compares debt with accepted project costs.

Identify the lender’s definition of debt and valuation basis before comparing percentages. A completed-value limit doesn’t state how much cash is available during construction.

Presales, Preleases and Subordinate Funding

Match presale contracts or preleases to the lender’s acceptance rules and the exit model. Record the buyer or tenant, deposit, conditions, settlement or commencement date and any right to withdraw. Have the lawyer assess enforceability, while the lender decides which contracts count toward its credit requirements.

Presales are lender-specific. Solido Capital’s development finance page, as at October 2026, says it imposes no presale conditions or milestones.

Solido also makes preliminary approvals subject to due diligence and credit committee approval. That is Solido’s stated approach, not a general rule for development finance lenders.

Without presales, model how completed stock will sell and how long debt must remain outstanding. For a leased project, test the tenant’s obligations and rent commencement against the proposed investment refinance.

Mezzanine finance is debt that sits behind senior finance in the repayment order. A stretched senior facility increases funding from the senior lender under its agreed structure.

Both change the cost and amount of debt to repay. Map consent requirements, security and repayment priority before adding either to the funding plan.

For a first-time developer, document the delivery team’s completed projects and each person’s responsibilities. Claims of low-documentation or no-documentation funding don’t describe what this project needs to establish ownership, build costs and repayment. Compare the actual evidence requirements in the proposed terms.

Control Construction and Drawdowns

Control construction funding by matching each advance to completed work and the money still needed to finish. A facility limit alone doesn’t establish that the next progress claim will be paid.

Record the builder’s relevant licence, insurance, financial position and experience with comparable projects. Have the contract reviewed for scope, exclusions, variations, payment milestones and completion obligations. Match the contract to approved plans and the feasibility’s construction allowance.

Assign the quantity surveyor’s reporting scope before construction funding starts. A quantity surveyor checks project costs and progress for the agreed purpose. Put the reporting timetable and cost-to-complete updates into the funding plan, alongside the lender’s drawdown conditions.

BOQ Specialist’s March 2026 Facility General Conditions show how one lender controls advances. Its construction provisions require written particulars of completed works and satisfaction with consultant reports and inspections.

Under those March 2026 conditions, BOQ Specialist determines the advance and can appoint a valuer, quantity surveyor or engineer. If it advances less than requested, the borrower must arrange the balance with the contractor unless agreed otherwise.

For each claim, reconcile work completed, payments already made, outstanding invoices and the updated cost to complete. Compare that remaining cost with undrawn usable funds and evidenced sponsor cash. Include remaining finance charges and any costs outside the builder’s contract.

If a variation raises cost or a delay extends interest, update the feasibility before assuming another advance. Record the extra contribution, lender consent and revised completion date. When available funds no longer cover remaining obligations, resolve the shortfall before relying on the next drawdown.

Evidence the Exit Strategy

Evidence the exit with receipts or refinance capacity sufficient to repay the debt by the facility’s maturity date. Construction completion and debt repayment are separate milestones.

For a sale exit, reconcile expected proceeds with contract settlement dates, unsold stock and remaining selling costs. Include title creation and completion requirements that affect settlement. Use the lender’s agreed debt-release conditions for staged sales rather than assuming every receipt is available for distribution.

A retained-investment exit needs evidence of value, rent and serviceability, meaning the ability to meet the replacement loan’s repayments. Model vacancy, lease commencement and existing commitments. Use the commercial property loan guide for completed-property acquisition and refinance assessment.

For a refinance, separate an indicative discussion from a credit-approved facility with conditions cleared. Compare net replacement funds with all debt to discharge, including fees and accrued interest. Test a lower valuation and delayed lease-up as well as the developer’s preferred case.

Assemble the Submission Evidence

Keep the documents consistent with one dated feasibility and the proposed borrowing structure. Collect the following assessment evidence.

• Site ownership or acquisition documents, title details and existing loan balances.
• Planning approvals, conditions, current plans and relevant site investigations.
• Feasibility, cash-flow forecast, cost quotations and the finance assumptions used.
• Building contract, scope, builder information and quantity-surveyor reports required for the facility.
• Valuations, presale contracts, deposits, leases and sales or leasing assumptions.
• Sponsor financial records, available equity, development history and borrowing-entity information.
• Proposed facility terms, guarantees, funding priorities and the documented repayment exit.

If expected sale receipts fall short of debt, reconcile the contracts and valuation with the model. Reduce the funding request or evidence the additional repayment source. If refinance remains conditional on occupancy, show how the project funds the period before tenants move in.

Bridge and Exit Finance for Developments

Development bridging finance covers a specific interim funding need, such as settling the site before construction finance or holding completed stock before sale. Match its maturity to an evidenced next funding event.

Funding stage	What it funds	Repayment evidence to carry forward
Acquisition bridge	Site settlement or an interim debt gap	Construction-facility conditions, approval timeline and cash contribution
Development construction finance	Approved works through controlled advances	Remaining cost to complete and sale or investment exit
Completed-project exit finance	Debt on completed stock awaiting sale or investment refinance	Completed value, sale schedule or rent and replacement-loan capacity

An acquisition bridge must allow time for the planning and construction-funding conditions that remain. A construction facility must cover the remaining works before completed-stock finance is assumed. Check the receiving lender’s acceptance of the project’s actual stage.

For a hypothetical bridge maturing in nine months, a planned construction refinance in month six leaves a three-month allowance. If approval moves to month ten, repayment occurs one month after maturity. Calculate the additional carrying costs and evidence a revised facility, sale or cash repayment before treating that delayed exit as workable.

Carry the bridge’s interest treatment, fees and discharge amount into the next feasibility. A refinance that matches the original advance can still leave a shortfall once accrued costs are included.

Structure Joint-Venture Development Finance

For joint-venture development finance, identify who contributes land or cash, who borrows and who controls decisions and repayments. The agreement must explain how those parties’ interests fit the lender’s security and funding conditions.

Record the landowner, developer, investors, borrowing entity and proposed guarantors. Map the value and timing of every contribution. Distinguish an equity contribution from a shareholder loan that carries its own repayment rights.

Give the client’s lawyer the joint-venture agreement, title arrangements and proposed facility terms. Have the lawyer address decision authority, cost-overrun obligations, security consents, default rights and distribution priorities. Refer ownership and tax treatment to the client’s qualified advisers.

The lender’s separate assessment concerns the borrower, security, guarantees, available contributions and repayment evidence. Present an agreed payment order showing senior debt, subordinate debt and investor distributions. Don’t assume the parties can distribute proceeds before the lender’s debt-release requirements are met.

Before submitting, reconcile the borrowing entity and site rights across the agreement, contracts, valuation and finance request. Confirm that the dated cash-flow model covers each payment and that the stressed exit repays all facility debt. Resolve any mismatch in contribution timing or repayment priority before the parties rely on the funding plan.