Need to fund your next development?
Sourcing finance for the development of property and construction of buildings can be challenging. This is especially the case if you are an individual investor or small developer looking to take advantage of property development (possibly for the first time). Loan products designed towards property development generally operate as interest only with draw down facilities.
You may also be required to provide the lender with some form of additional security for the loan,which may include:
- residential property or commercial property
- assets ie. shares
Before you commence any development project, it is crucial to first establish how much you can borrow and how you will be able to manage all associated costs of the development.
Property development finance in practice
For more extensive projects and ground-up developments, you can find ‘development finance’ to cover both land purchase and building costs. For example, if a developer wants to buy a plot of land for $500,000 and spend another $1.2 million building properties on it, a lender might finance 65% of the land purchase and 75% of the build.
Scenarios can vary dependent on the lender and loan structure.