What is a construction loan?
A construction loan is a short-term financing facility used to fund the building or development of residential, commercial, or mixed-use property. Unlike a standard property loan, construction finance is drawn down in stages as building milestones are reached, rather than advanced as a single lump sum at settlement.
In Brisbane and across South East Queensland, construction loans are commonly used for townhouse developments, apartment buildings, residential subdivisions, commercial fit-outs, and mixed-use projects. The growing population and infrastructure investment in the region, including the 2032 Brisbane Olympics, continue to drive demand for development finance.
How are construction loans structured?
A typical construction loan has a term of 12 to 24 months and is secured by a registered mortgage over the development site. The loan is drawn down progressively as the project advances through defined construction stages, with each draw-down typically verified by an independent quantity surveyor.
The quantity surveyor inspects the site, confirms that the work completed matches the approved construction budget, and certifies that the remaining budget is sufficient to complete the project. This process protects both the lender and the investors whose capital is deployed through the fund.
What do lenders assess?
When assessing a construction loan application, lenders evaluate the feasibility of the proposed development, the experience and track record of the developer, the quality and location of the security property, the expected end value upon completion, the cost to complete, and the proposed exit strategy.
Independent valuations are obtained on the security property, and loan-to-value ratios are assessed conservatively. For non-bank lenders like Granor Capital, loans are typically available from $200,000 to $20 million, with LVRs of up to 80 per cent.
Why Brisbane developers choose non-bank finance
Brisbane’s property market presents opportunities that may not always align with traditional bank lending criteria. Non-bank lenders can assess each application on its merits, offer faster credit decisions, and provide more flexible terms that suit the specific requirements of Brisbane development projects. This is particularly relevant for smaller and mid-sized developers who value direct engagement with experienced credit decision-makers.
Related resources from Granor Capital
Read more about how property development finance works across Australia, or compare non-bank and bank lending for your next project. Learn about independent valuations and their role in the lending process. Get a construction loan from Granor Capital.
This article is provided for general information purposes only and does not constitute financial advice.
