|Development funding in Australia is the financing provided to developers for the construction or renovation of commercial or residential properties. Developers typically require funding to purchase land, obtain planning approvals, and pay for construction costs.
In Australia, there are several options available for developers to obtain funding, including traditional lenders such as banks, non-bank lenders, and private investors. These lenders typically offer different types of loans such as construction loans, mezzanine finance, and joint venture funding.
Construction loans are typically used to finance the construction of a new property or to renovate an existing property. These loans are usually provided in stages throughout the construction process and are secured by the property being developed.
Mezzanine finance is a type of funding that sits between the senior debt (i.e. bank loans) and the equity financing. This type of financing is typically used when the borrower cannot obtain sufficient senior debt from a bank. Mezzanine finance is usually more expensive than senior debt, but it can be a useful option for developers who need additional funding to complete their project.
Joint venture funding involves partnering with an investor or another developer who will provide the necessary funding for the project in exchange for a share of the profits. Joint venture funding can be a useful option for developers who lack the necessary funding or expertise to complete a project on their own.
Before considering any type of development funding in Australia, it’s important to carefully consider the terms and conditions of the loan, including interest rates, fees, and repayment terms. It’s also advisable to seek professional advice from an accountant or financial advisor to ensure that the loan is suitable for your individual circumstances and that you have a solid plan for repaying the loan.
- Borrow up to 65% of GRV less GST to 80% of the Total Development Costs (TDC) – Whichever is lesser
- Stretched Senior Facilities to 75% of GRV & 90% of TDC with pre-sales.
- Funding is also available for incomplete or partially complete projects and land subdivision.
- Construction of Residential or Commercial Property
- Companies and trusts only.
Most development funding applications are assessed according to the standard process and many of the same documents are required, along with a fully completed documentation which includes:
- Overview of the project with key metrics summarised
- Valuation Report and Quantity Surveyor Report if available
- Copy of the contract of sale (if acquisition).
- Details (lender and outstanding balance) of any mortgages currently on the property.
- Feasibility study for the project.
- Copy of the Development Approval and Building Approval (Construction Certificate)
- Confirmation of Pre Sales contracts if available
- Copy of fixed Price Building Contract or Confirmation of construction / development costs
- Details of the proposed builder and a resume of their building experiences
- Resume of the borrowers development / building experiences