Property Development Finance
Access lender-grade funding for duplexes and townhouses through to multi-storey or mixed-use projects. Our model is feasibility-first, exit-ready, and built to move from term sheet to first draw with minimal friction. We assess real risk, not box-ticks—and we stay engaged through construction, valuations, and settlements.
How Can I Find Suitable Property Development Finance?
At Mortgage House, we are focused on finding you suitable finance, whether your next property development project is a multi-dwelling apartment complex or a skyscraper. Mortgage House understands that your needs as a developer can be quite different, depending on your experience level and what kind of property you are looking to build. But whatever your needs, you will need finance to continue growing your business. Whether you’re considering a commercial or industrial development, a residential property development, or even subdividing land, Mortgage House’s lending specialists can help you fund it.
Property development finance is a loan that can help you fund construction of more than one property on one title. Most banks and lenders split property development into two parts, and both can have very different approval processes, fees and charges, interest rates and risk assessments.
They are:
- Residential. Most banks and lenders define residential property development as smaller-scale development, often up to four different units. This kind of mortgage can have standard fees and charges and is the less risky of the two.
- Commercial. If your property development is greater than four or five residential units, banks and lenders are likely to characterise it as commercial property development. This can be anything from a skyscraper to a series of commercial properties. These kinds of mortgage applications can be more complex, and often attract a higher interest rate to protect the bank or lender against risk.
What We Finance
Residential(≤4 on one title)
Streamlined assessment, residential-style covenants, staged drawdowns, valuation-led QS controls.
Commercial / Larger Residential(5+)
Purpose-built structures with interest capitalisation, pre-sale/pre-lease tests (where applicable), and milestone reporting.
Land Banking & Staged Subdivision
Acquisition funding for strategic sites where zoning uplift, services, and staging create value. We underwrite the holding plan, approvals pathway, carrying costs, and exit options.
Lending Approach
Detailed Feasibility Study: What we expect
Include: purchase terms; planning/zoning status; services and infrastructure; build method; contingency; QS budget; program & critical path; sensitivity tables (sales price, build cost, interest rate); comparable evidence; pre-sale or pre-lease strategy (if any).
Upload all supporting reports (town planning, services, geo/soil, flood, bushfire, traffic, acoustic, heritage).
Exit Strategy: sales, refinance, or hold
Nominate a primary and a secondary exit. Align pre-sales, leasing pipeline, or valuation thresholds to repayments. Show refinance readiness (stabilised income, DSCR, LVR).
We price risk off the credibility of your exit.
Equity options when the deposit is tight
Optimistic plans that rely on reduced deposit or under-baked contingencies will trigger a discussion about bringing in an investor representative of pooled funds to take a minority equity position.
This can de-risk gearing, preserve working capital, and satisfy covenant headroom. Equity terms are negotiated independently and documented alongside the debt.
Loan Structures & Draws
Construction drawdowns & progress claims: QS-verified progress claims tied to defined stages. Interest is charged only on drawn amounts.
Interest capitalisation & covenants: Where eligible, interest can be capitalised into facility limits. Standard covenants include build program adherence, no unauthorised variations, and reporting cadence (QS, site, insurance currency).
Fixed-Price vs Owner-Builder
Fixed-Price Building Contract
Benefits
Cost certainty and lender-friendly risk profile
Clear defect/liquidated damages regimes
Easier QS validation and cash-flow planning
Risks / Watch-Outs
Variations and provisional sums can erode certainty
Builder solvency and capacity must be diligenced
Program slippage can still affect interest and covenants
Owner-Builder + trade contracts
Benefits
Potential margin savings and design control
Flexible staging and value-engineering on the fly
Risks / Watch-Outs
Higher perceived delivery risk, heavier reporting
Insurance, licensing, and statutory obligations increase
Coordination risk across multiple subcontractors
More conservative LVR/ICR and contingency expectations
Application Checklist
Upload clean, searchable PDFs. Expect verification.
Identity & Entities
- Current ASIC extracts, trust deeds, corporate structure chart
- Beneficial ownership & KYC (per AML/CTF)
Project Dossier
- Signed purchase contract / title; planning reports; services confirmations
- Detailed feasibility with sensitivities; QS estimate and program
- Builder credentials (licence, insurances, track record), proposed contract form
- Valuation instructions preference; sales/leasing evidence; pre-sale strategy
Financials
- Statement of Position; evidence of equity; debt schedule
- Three months bank statements for equity source; tax compliance status
Risk & Insurance
- Construction/contract works, public liability, professional indemnity (as relevant)
- WHS plan; principal contractor appointment
Exit
- Sales schedule and marketing plan or refinance pathway (broker term sheet indicative)
What is LVR?
Loan-To-Value Ratio is the percentage amount you can borrow compared to the value of the property you are buying. If your property is worth $1million, and your LVR is 80%, then you will need to find a deposit of 20%. Having access to a larger deposit can give you a higher LVR, meaning you may be able to negotiate a better interest rate.
While some regular residential mortgages can allow a Loan-to-Value Ratio of up to 90%, banks and lenders tend to be more conservative when it comes to property development finance, either residential or commercial. That means the Loan-to-Value Ratio can be as low as 70% for larger developments, and maybe up to 80% for smaller, lower-risk opportunities. Speak to our lending specialists to find out what your Loan-to-Value Ratio might be for your planned project.
Mortgage House may also take into account a range of other variables when finding out how much you may be able to borrow. These can include:
Extra funds
Do you have extra money available in case something goes wrong when your property development is being built?
Life of the loan
How long do you want to borrow the money for?
Loan size
How much money do you want to borrow?
Feasibility
How feasible is the property development you are looking to build? Is it in the right area, is there currently demand in the market for such development?
Hard costs
Most residential development mortgages will only cover you for what is called hard costs. Hard costs are things such as the materials and labour used when building your property development. The other costs, such as legal and council fees, land clearing and design fees, are unlikely to be included in a successful property development mortgage application.
How Much Can I Borrow To Develop A Property?
Mortgage House prides itself on being different to banks and other lenders. We are focused on tailoring outcomes that are to the exact needs of every client, and we do it by actively listening to what they want, not what we think their needs may be. That’s because we want to help you find a suitable loan and mortgage finance product and help you by providing ongoing support over the life of the loan. When it comes to property development finance, our specialist technology can ensure a seamless process for our clients, as we provide them with all the tools, knowledge and experience we have. When it comes to property development, borrowing money can be a similar process to a regular residential mortgage, especially if your proposed development fits in with the residential definition above. However, banks and lenders will focus on the higher risks associated with lending money for this purpose, and as such there can be a range of extra things to consider. The first is LVR, or Loan-to-Value Ratio.
Are Construction Home Loans Different?
If you’re looking for residential property investment finance, rather than commercial, you may notice a few similarities with a regular residential Construction Loan. A Construction Loan can be suitable if you’re building a house, either to live in or as an investment opportunity. Building can be one of the most affordable ways to own a home in Australia, and a lot of that has to do with stamp duty. Stamp duty is a tax or a levee on a transaction, and is charged on a range of financial transactions, including when a property changes hand. When building, stamp duty is often only paid on the purchase of the block of land, not the home itself. As a result, people can save a lot of money buying a property off the plan.
Construction Mortgages also have a range of other benefits, ones that also apply for residential property investments, or developments under a certain amount of unit (eg four). The key one is that payments can be staggered, based on a range of agreed stages. What that means is a bank or lender will pay the builder only when those stages have been met, rather than all of it in one lump sum. That can save you money as the property developer, as you are only charged interest on the amount of money paid out at the time. Once construction has finished, the mortgage will revert to a typical standard loan. The construction stages usually include:
- The deposit. When the deposit is paid to the builder.
- The foundation. This is usually when the base, otherwise known as the footings, are poured.
- The framing. It is usually when the frame, bricks and roof trusses are finished.
- The lock-up. This is when your home is weather-proof.
- The fixing. When the development is fitted out with the fixtures and all the plumbing, electrical and appliances are done.
- Completion. The final payment will be made, and the construction loan will become a standard loan, once the project is finished.
What kind of loan can I get?
Most banks and lenders offer two different kinds of home loan options, whether you’re buying a home or developing property:
- Variable Interest Rate Loan.These kinds of loans have an interest rate that can increase or decrease over the life of the loan, based on a range of internal and external variables. These variables can include the state of the national or international economy, Reserve Bank policy, or the cost to the bank or lender of providing you with the mortgage. Interest rates for variable mortgages are usually lower than comparable fixed-rate home loans.
- Fixed Rate Home Loan. The interest rates of a fixed-rate mortgage will stay the same for an agreed period, usually between 1 and 5 years. That means your loan will be immune from any official interest rate rises for the agreed period, which can make budgeting your repayments easy. That can be a big benefit if you are developing a range of units and plan to build and sell them within the agreed fixed-rate period.
While Mortgage House offers a range of loans, some may not be suitable for property development. It is unlikely property developers will be able to apply for a bad credit loan or a low doc mortgage, and other kinds of loans may attract higher fees.
What do I need to apply for a property development loan?
The first step in applying for property development finance with Mortgage House is to contact our lending specialists. You can call when it suits or use our special online calendar to book a time for us to call you at a time convenient to you. In the meantime, our Loan Application Documentation Checklist below can give you a quick idea of the kinds of information we may ask you for to start with.
Proof of identity (you will need at least one form of photo ID)
- Passport
- Driver’s licence
- Proof of age card/Australian tertiary institution card, Department of Defence ID, Waterways/Boat licence
- (If you only have one form of photo ID, you will also need to supply secondary identification)
- Birth certificate (required if you will be applying for the FHOG)
- Citizenship certificate
- Centrelink pension card
- Medicare card
- Current/recent rates or utilities bill
- Tax assessment notice (most recent)
Income
- Two latest payslips or a letter from employer stating length of employment (if still on probation), gross and net income, regular overtime and allowances.
- If self employed, you will need your income tax returns from the last two financial years, and your most recent Assessment Notice. Some lenders may require profit and loss statements certified by a registered accountant.
- Confirmation of any Centrelink payments you receive (eg. Family Benefits).
- Details of any other income, bonuses, allowances or benefits.
- If buying an investment property, you will need to supply either a copy of the lease agreement with the current tenant, or a letter from your property manager confirming estimated rental income.
- Confirmation of net rental income received from any other investment properties.
Expenses
- Details of your rent/board payments
- Council and water rates
- Electricity and gas bills
- Details of any extraordinary expenses (eg. private school fees or maintenance/child support payments).
Assets
- Bank statements showing history of savings (usually 3 months).
- If using the settlement from another property as your deposit, you will need a letter from your solicitor confirming the net settlement amount.
- Should your deposit/part thereof, be a gift you will need a statutory declaration showing how much of the deposit is a gift and that the amount does not need to be repaid. Some lenders may need proof that the gift has been in your savings account for a 3 month period.
- Details of assets including superannuation and any shares held.
- If other investment properties are owned, you will need to provide copies of the rates notices on each property.
- Confirmation of other assets (eg. insurance statements which include sum insured for your motor vehicle assets and your home contents value).
Liabilities
- The day before the move: defrost and clean fridge/freezer; take out garbage; pack an overnight bag with pyjamas, toothbrush, tea, mug, sheets, towels for your first night at the new place.
- Enlist friends and relatives to help you on the big day.
- Empty drawers, remove doors from wardrobes, dismantle items for easy moving.
- The day of the move: have plenty of water available; lock valuables in your car until the move is over.
Other
- If you have already identified the property you will need to supply:
- Copy of the contract
Copy of the certificate of title - Copy of transfer of land
- If you are a builder, your broker will also need to see a copy of council approved plans, the building specifications and your fixed price contract (construction/renovations) from your builder.
- If you are refinancing, your broker will also need to see:
- The loan statements on the property you are refinancing
- Details of the home to be refinanced (eg. number of bedrooms, bathrooms, garages and other inclusions)
However, a bank or lender is likely to want to know more information than what is in the above checklist, and a lot more than what is required for a regular home loan. They will need to understand the full picture of your assets and liabilities and develop a clear understanding of your credit report and credit rating. A bank or lender is also likely to want to know as much about your development plans as possible, to assess whether or not they believe it is viable and whether the risk is one worth taking. That can mean showing them your business plan, which will need to be as detailed as it can be. Our lending specialists can also help answer all your questions about whether or not you can buy one of the properties you are developing, and provide you with information around refinancing, if that is something you require.
FAQs
What LVR do you consider?
Residential infill up to ~70–80% of TDC when risk supports it; larger developments typically more conservative.
Do you require pre-sales?
Assessed case-by-case based on location, scale, and exit plan.
Can interest be capitalised?
Where debt capacity and covenants allow.
Disclaimer: Information is general.Credit criteria, terms, and fees apply.
Assessments include feasibility, risk, and exit. We may request additional information to meet AML/CTF and credit responsible-lending obligations.
