What is property development finance?
Property development finance is a form of short-term lending that provides capital to fund the construction or development of residential, commercial, or mixed-use property projects. Unlike a standard home loan, development finance is typically structured around the lifecycle of a specific project — from land acquisition or pre-construction through to completion and sale or refinance.
Loan terms generally range from 12 to 24 months, reflecting the expected timeline for the development to be completed and the loan to be repaid. Funds are usually drawn down in stages as construction milestones are reached, rather than advanced in a single lump sum.
How are development loans assessed?
Development finance is assessed differently from standard property lending. Lenders evaluate a range of factors specific to the project, including the feasibility of the development plan, the experience and track record of the developer, the expected end value upon completion, the cost to complete, and the level of pre-sales or pre-commitments (where applicable).
Independent valuations are obtained on the security property, and loan-to-value ratios are assessed on both an “as is” and “as if complete” basis. The lender will also consider the borrower’s capacity to manage the project through to completion, including their ability to manage cost overruns, construction delays, and market conditions.
The role of the quantity surveyor
In most development finance arrangements, a quantity surveyor (QS) is appointed to independently verify the progress of construction at each drawdown stage. The QS provides a report confirming that the work completed to date is consistent with the approved construction budget and timeline, and that the remaining budget is sufficient to complete the project.
This independent verification process is an important risk management tool. It ensures that funds are only released when genuine construction progress has been made, reducing the risk of over-advancement.
Why developers use non-bank finance
Many property developers work with non-bank lenders because of the speed of assessment, the ability to engage directly with credit decision-makers, and the flexibility to structure loans around the specific requirements of each project. For smaller or mid-sized developers in particular, non-bank lenders can provide access to capital that may not be available through traditional bank channels.
Related resources from Granor Capital
For a step-by-step overview, see our guide on how to apply for a property development loan. Learn about construction loans in Brisbane specifically, or compare non-bank and bank lending options. Apply for development finance with Granor Capital.
This article is provided for general information purposes only and does not constitute financial advice.
