Property development finance follows a different logic to a home loan. A lender is not backing your salary, it is backing a project: the feasibility, the equity, the builder, the demand, and the exit. Understand what they are looking for and you can fund a development that stacks up. Here is how it works in Sydney in 2026.
The five things every development lender wants to see
Financing a development comes down to five things. Get them right and the funding follows.
- A feasibility that stacks up, with a margin on cost that can absorb a setback
- Enough equity in the deal, usually 20% to 30% of total cost
- A credible, experienced builder on a fixed-price contract
- Evidence of demand through pre-sales or pre-leases
- A clear exit through sale or refinance
We arrange this through our commercial development finance service, part of our wider commercial lending offering. For complex or staged projects, our development finance desk handles the heavier structures.
Development finance follows the project, not your payslip.
How much you can borrow
Development lending is measured against cost and end value, not a single loan to value ratio. Whichever limit is lower sets your ceiling.
| Measure | Typical limit |
|---|---|
| Total development cost (TDC) | Up to 70% to 80% |
| Gross realisation value (GRV) | Up to 65% |
| Land component | Up to 60% to 70% |
| Residual stock | Up to 65% to 70% of unsold units |
| Private or stretched senior | Higher, deal by deal |
In practice, your equity contribution and your pre-sales decide how much a lender will advance. Plan for a 20% to 30% equity stake, whether cash, land equity, or a joint venture partner. Our borrowing power calculator is a quick starting point before we model the full feasibility.
Pre-sales, and when you can avoid them
Banks usually require pre-sales covering 60% to 100% of the debt before they will fund construction. Non-bank and private lenders take a more flexible view and can fund with low or no pre-sales, which suits smaller projects and developers who prefer to sell on completion into a strong market. The trick is matching your pre-sale position to a lender whose policy fits, so you are not forced to discount stock just to satisfy a bank.
Matching your pre-sale position to the right lender protects your margin.
Structures that stretch your equity
Beyond a standard senior loan, three structures help you do more with less of your own cash in the deal.
- Bridging finance to secure or settle a site quickly, before the construction facility is ready, then roll into the construction loan once approvals and pre-sales are in place.
- Mezzanine finance that sits behind the senior loan and reduces the equity you contribute directly, at a higher cost. It can make a project viable, or let you run more projects, than your cash alone would allow.
- Joint venture finance where a landowner and a developer, or two developers, partner on a project. Lenders assess the combined experience, equity, and structure.
If your project is a single build rather than a multi-dwelling development, a standard construction loan may be the simpler path. Our construction loan process guide walks through how staged drawdowns work.
Development finance is released in stages as the build reaches each milestone.
How the loan is drawn down
Development finance is released in progressive drawdowns tied to construction milestones, not as a lump sum. A quantity surveyor certifies each stage, slab, frame, lock-up, fixing, and completion, before the lender releases the next tranche. You pay interest only on funds drawn, and interest is often capitalised so you are not funding repayments during the build. We coordinate the quantity surveyor and lender so your builder is paid on time.
Residual stock: protect your margin at the end
When the construction loan falls due, unsold units can move onto a residual stock loan so you sell in your own time instead of discounting to clear debt. These are funded to around 65% to 70% of the value of the completed, titled units, and they free up cash to move on to your next project. If you are comparing project types, our land and construction loan guide is a useful companion.
Getting started
Financing a development well starts before you buy the site. We model the feasibility with you, confirm realistic leverage, and match the deal to the funder most likely to back it. Book a free strategy call or contact us to talk it through. As a Norwest mortgage broker we work with developers across Sydney and the growth corridors.
Ready to talk to a broker?
Bring us your feasibility and site before you commit. We will confirm realistic leverage, map the funding structure, and match your development to the right lender. Book a free strategy call and we will get started.
Quick answers
Frequently asked questions
Build a feasibility showing total development cost, gross realisation value, contingency, and profit margin, confirm your equity contribution of around 20% to 30%, line up an experienced builder and approvals, test demand through pre-sales, and match the deal to a lender whose policy fits your exit. A broker models the numbers and takes the deal to the funder most likely to back it.
Most lenders fund up to 70% to 80% of total development cost, so plan for a 20% to 30% equity contribution. That can be cash, equity in the land you already own, or a joint venture partner. Your pre-sales and experience also affect how much a lender will advance.
A construction loan usually funds a single dwelling, assessed on your income and the end value. Development finance funds multi-dwelling projects, subdivisions, and commercial builds, assessed on feasibility, cost, GRV, pre-sales, and developer experience. The lender panel and process are more involved.
Banks usually require pre-sales covering 60% to 100% of the debt. Non-bank and private lenders can fund with low or no pre-sales, which suits smaller projects or selling on completion. We match your pre-sale position to a lender whose policy fits.
Gross realisation value is the projected total end value of the completed project. Lenders cap the loan at around 65% of GRV, alongside a limit against total development cost. Whichever is lower sets your borrowing ceiling.
Yes. Bridging finance is often used to secure or settle a site quickly before the construction facility is ready, or to cover the gap between projects. It is short-term and priced higher than senior debt, so the exit needs to be clear.
Mezzanine is a second layer of funding behind the senior loan that reduces the equity you put in directly, often taking total funding to 85% or more of cost. It costs more than senior debt, so it makes sense when the extra leverage lets you proceed with a project you otherwise could not.
Usually 6 to 12 weeks, allowing for feasibility review, valuation, quantity surveyor reports, and pre-sale checks. Private funding for time-critical deals can settle in days to a couple of weeks.
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