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Construction Loans
Our experience over the past 23 years in construction loans, provides you with an edge in the market by achieving funding objectives, quickly and effectively. We will provide you with the best development finance interest rates and terms available at the time of applying.
Whether you are a long standing conservative property developer seeking low interest rate property construction loans from a Bank, Building Society or Institution or a developer seeking more flexible finance facilities from private lenders with no pre-sales or mezzanine finance for higher gearing and less equity, we can provide a funding solution to cater for your strategic needs.
We have Mortgage Funds, Private Lenders & High Net Worth Investors who will lend construction loans without presales before commencement of construction.
We have very large investors that can provide 1st mortgages up to $1b and 2nd mortgages up to $100M or more for projects that do not comply with normal Bank criteria or the loan amount is too large for a private lender or mortgage fund to finance.
A property developer’s ability to acquire new projects directly relates to the amount of equity/cash the developer is required to contribute to the project. Through prudent financial structuring Prudential Finance can maximise a developer’s debt gearing to free up capital for the next project.
For additional funding over and above the senior debt, see our Mezzanine Finance page.
Q&A
A construction loan is finance that funds the build cost of a property in staged drawdowns, with interest typically capitalised during the construction period and the loan repaid on project completion or sale.
Prudential Finance facilitates construction loans from $1 million to $500 million or more, covering residential, commercial and mixed-use developments across Australia.
No. Prudential Finance has access to mortgage funds, private lenders and high net worth investors who will fund construction without pre-sales, unlocking projects that banks will not finance.
Construction loans are typically approved up to 80 percent of Gross Realisation Value (GRV) or 90 percent of Total Development Costs (TDC), with exact gearing depending on project type and borrower strength.
Funds are released in progressive stages against a quantity surveyor's report, typically at land settlement, base, frame, lockup, fixing and practical completion.
Interest is usually capitalised into the loan facility for the construction period, meaning no cash interest repayments are required until completion or sale. Cash pay options are available where preferred.
Rates vary by funder, project size and risk profile. Indicative pricing ranges from around 9.5 percent per annum for prime projects to 13 to 15 percent per annum for stretched or complex senior debt. Current pricing is quoted per application.
Loan terms are typically structured as the construction period plus three to six months, giving the developer time to complete settlements on sales without forced refinance.
Construction loans are still possible with prior credit issues, though pricing and LVR will be adjusted. Existing defaults must typically be paid out on settlement of the new facility.
Settlement typically takes four to six weeks from engagement, subject to valuation, QS report, builder contract review and legal documentation.
Typical requirements include a project feasibility, DA and construction certificate, builder contract, QS report, valuation, borrower financials and company and director details.
Yes. Senior construction debt is often stacked with mezzanine finance or preferred equity to increase total gearing and reduce developer cash equity.