Mortgage for Property Development
A mortgage for property development gives you the structured finance to fund land acquisition, construction, and project completion — whether you're developing townhouses, apartment complexes, commercial buildings, or mixed-use projects. Smart Mortgage Corp works with specialist lenders across Australia to secure the right property development mortgage for your project size and experience level.
Types of Development Finance
Senior Debt (First Mortgage Finance)
- The primary loan secured against the property. - Covers up to 65-75% of Total Development Costs (TDC). - Repayments may be interest-only during the construction phase. - Typically provided by banks and major lenders.
Mezzanine Finance
- A secondary loan used to reduce the developer’s capital contribution. - Sits behind senior debt, increasing overall leverage. - Can extend funding to 85-90% of TDC. - Higher risk = higher interest rates.
Private & Non-Bank Development Finance
- Offers flexible lending criteria and higher LVRs. - Faster approvals compared to traditional banks. - Suitable for projects with unique structures or limited pre-sales. - Interest rates vary based on risk and lender type.
Joint Venture (JV) & Equity Finance
- Investors or equity partners provide capital in exchange for a share of project profits. - Reduces the need for traditional debt but requires profit-sharing agreements.
How Much Can You Borrow?
Loan-to-Cost Ratio (LTC)
% of total development costs covered (typically 65-75%).
Loan-to-Gross Realisation Value (LVR or GRV)
% of completed project value that can be borrowed (typically 60-70%).
Pre-Sales & Pre-Leasing Requirements
Some lenders require a percentage of units pre-sold before releasing funds.
Developer Experience
More funding options for developers with a proven track record.
How Development Finance is Drawn
1. Land Acquisition
The first drawdown funds the purchase of the development site. Interest is charged only on this initial amount while you prepare for construction.
2. Construction Drawdowns
Funds are released in progress payments as each construction milestone is reached — slab, frame, lock-up, fixing, and practical completion. The lender inspects the site before each release.
3. Completion & Exit
Once the project is complete, the facility is repaid through settlement of sales or refinanced into a long-term investment loan. A clean exit strategy is something lenders look for when approving a development mortgage upfront.
A property development mortgage (also called construction finance or development finance) is a specialist loan used to fund the construction or development of residential or commercial property. Unlike a standard mortgage, funds are drawn progressively at each construction milestone rather than provided as a lump sum — so you only pay interest on the amount drawn at any time.
Most lenders will finance up to 65–70% of the total development cost (TDC) or as-if-complete valuation (GRV), whichever is lower. The exact amount depends on your project type, location, developer experience, and pre-sales achieved. Our brokers work with specialist lenders to maximise your borrowing capacity for the development mortgage.
We arrange property development mortgages for residential subdivisions, townhouse and apartment developments, mixed-use projects, commercial developments, and land banking. Our brokers work with specialist lenders across Australia to match the right mortgage structure to your project.
A property development mortgage is drawn in stages tied to construction milestones — such as slab, frame, lock-up, fixing, and practical completion. The lender carries out progress inspections before releasing each drawdown. Interest is only charged on the drawn balance, which helps manage cash flow throughout the project.
Requirements vary by lender. Some lenders require prior development experience to approve a development mortgage; others work with first-time developers who have a strong project, an experienced builder, and a solid feasibility study. Our brokers match you with the right lender for your experience level and project profile.