What is Development Finance?
Development finance is funding for the purpose of building new residential and commercial development projects. Examples include housing estate subdivisions, apartment builds, office blocks being repurposed and large scale property refurbishment. Funding can be for residential, commercial and mixed-use properties. Development finance is not used for smaller-scale developments of fewer than four residential dwellings but for larger scale commercial and industrial development projects.
Development finance typically operates as an interest-only, draw-down term loan funding the various stages of the development. Typically the loan term would be six to 18 months, depending on the size and nature of the project. Usually, the interest on a development loan is capitalised within the development period with the entire loan, inclusive of interest charged, being repaid upon the sale of the property. The interest can be rolled up into the loan, so there are no monthly payments.
Interest Rates vary dependent on project risk and most lenders require a substantial deposit of 35 per cent of the total project (plus costs) and a history of proven projects.
We can assist with the planning and funding process to ensure you are best positioned with the lender to successfully fund your next project.