Property Development Finance for Developers Across Australia
Oakwood Finance arranges development finance for residential, townhouse, mixed-use and commercial projects across Australia, from site acquisition through construction to residual stock. We present the feasibility, the builder and the sales evidence the way a credit committee reads them, compare bank and non-bank senior debt in parallel, and coordinate with your accountant, lawyer and quantity surveyor. Every facility is subject to lender assessment.
Key features
Funded against the project. A lender typically builds the amount up from what the project will cost and what it is expected to sell for. Your wider position supports the application, but the project usually carries it.
Staged funding. Construction money is generally released in stages as work is certified, so the debt follows the build rather than being drawn all at once.
One project, several stages. Oakwood arranges credit for site acquisition, the construction facility, residual stock, equity release and refinancing, across residential, townhouse, mixed-use and commercial projects, and for an acquisition facility ahead of your next project. Each proposal is subject to lender assessment.
Security and support. A lender usually takes security over the site and often looks for support from the developer and the entities involved. Which entity borrows affects the rest of your position.
Lender choice by project. Appetite varies with project type, size and location, so we compare suitable options from our lending partners for each project.
Considerations
Approvals. Planning and building approvals matter to a lender’s assessment, and the requirements differ between states and councils. Your town planner or solicitor can confirm what applies to your project.
Holding costs. Interest, line fees and other finance costs run through the build and the sell-down, so the feasibility should carry them, along with a contingency.
The exit. Decide how the debt will be repaid: sales as stock completes, or a refinance to a longer-term facility for property you keep. A residual stock facility can cover unsold stock.
Your advisers. Planning, tax, legal and quantity surveying advice comes from the professionals who provide it. We arrange the credit and coordinate with them.
Sized off the feasibility, not the borrower
Development funding is decided by the project. A strong balance sheet helps, but a credit committee is reading the feasibility, the builder and the sales evidence, in that order.
The three ratios
Lenders size a facility against total development cost, gross realisation and land value. Senior debt limits are commonly set against both total development cost and gross realisation, and the facility is sized to whichever produces the lower number. The limits vary by lender and by project.
The gap between the project cost and the debt is your equity, and it is expected to go in first or alongside, not last. Knowing the real equity requirement before you commit to the site is the difference between a project and an expensive lesson.
Presales, and when you can avoid them
Bank senior debt on a multi-unit residential project commonly requires qualifying presales, sometimes enough to cover the debt, with deposits taken and contracts unconditional. What counts as qualifying varies: related-party sales and unusually long settlements are frequently excluded.
Some non-bank and private senior lenders may fund with fewer or no presales, usually at a higher margin. On a short build with a strong margin, that extra interest can cost less than the discount you would give away achieving presales in a slow market. We run that comparison properly rather than assuming the lower headline rate always wins.
What a credit committee wants to see
Land at cost, construction on a fixed-price contract, professional fees, statutory costs, finance costs including the line fee, a real contingency, and revenue with evidence behind it rather than an agent’s optimism. Then you: prior projects of similar scale and type, and the builder’s track record and current capacity.
A first-time developer with a strong builder and a conservative feasibility may be assessable by some lenders. An experienced developer with an aggressive one may find it harder. Each lender decides for itself.
An illustrative worked example
An illustrative example of how a file like this can be approached. It is not a client outcome, and no result is implied. This is general information only, not credit assistance, a quote or a recommendation. Every structure depends on individual circumstances, lender credit policy and approval. Oakwood arranges credit through its lending partners; all lending is subject to lender assessment and approval.
Worked example · Small townhouse development
Getting a project away without giving the stock away first
Structure to consider: bank senior debt compared with non-bank senior debt
The situation. A developer with earlier projects behind them holds a site with development approval in place for a modest townhouse development, with a builder engaged and a fixed-price contract ready to sign.
The complication. Bank senior debt can require presales covering the full debt. In some markets, achieving them means discounting the first several units by enough to remove most of the project margin, so the finance condition can end up costing more than the finance.
What we would look at. Running bank and non-bank senior debt in parallel rather than one after the other, and modelling the true cost of each: the bank’s lower margin against the discount needed to reach its presale hurdle, versus the non-bank lender’s higher rate with no presale condition. The feasibility would be presented with the contingency visible and the quantity surveyor’s report attached rather than promised.
What the example shows. The lower headline margin does not always produce the lower total cost, which is why the comparison should include the discount a presale condition can require. Which facility, if any, a lender will provide is for the lender to decide.
Before you commit to a site
Get the development finance guide
Development finance is arranged for projects Australia-wide, including Adelaide, Brisbane, the Gold Coast and Perth.
This is part of our commercial finance range.
If you are building one home or a knock-down rebuild rather than a multi-unit project, construction finance is the better fit.