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Property Development Finance
Our experience over the past 24 years in property development finance and property development, 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 development finance 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
Private Development Finance & Construction Loans are not covered by Consumer Credit and are used for property development projects.
If constructing a residential property a company will need to borrow the money.
If constructing a commercial property, an individual or a company may borrow the money.
A clean credit rating is always preferable, although if you have paid or unpaid defaults, we can still lend you money.
All unpaid accounts and defaults must be paid out on settlement of the loan.
If you have a bad credit rating you will be charge a higher interest rate & fees, due to the increased risk rating.
Interest is capitalised due the term of the loan and therefore no repayments are required during the construction period.
Property development finance is a specialised loan facility used to fund the construction and completion of residential, commercial, mixed-use or industrial property projects. It typically combines land, construction and capitalised interest into one facility.
Prudential Finance facilitates property development loans from $1 million to $500 million or more, through mortgage funds, private lenders and high net worth investor networks.
Loans are typically structured to 80 percent of Gross Realisation Value (GRV) or 90 percent of Total Development Costs (TDC). Higher gearing is possible when combined with mezzanine finance or preferred equity.
Indicative senior development finance rates typically start from around 9.5 percent per annum for sub-$20 million loans, with larger loans (above $150 million) ranging from 13 percent to 15 percent per annum. Pricing is quoted per application.
Not always. Prudential Finance works with funders that approve construction loans with no pre-sales, particularly for well-located projects with experienced developers and sensible LVR.
Establishment fees typically range from 1.5 percent to 2 percent of the total loan amount, depending on funder and loan size. Quantity surveyor, valuation and legal costs are additional and disclosed upfront.
Funds are released in progressive stages against a quantity surveyor's progress claim report, reflecting actual work completed at each stage of the build.
Interest is typically capitalised into the loan facility during the construction period, with the full amount repaid from sale proceeds on completion. Cash-pay options are available where preferred.
Development finance is provided to company borrowers for residential projects. Commercial projects can be funded to individuals or companies. Experienced developers are preferred, though first-time developers with strong project fundamentals are considered.
Settlement typically takes four to six weeks from engagement, subject to valuation, QS report, builder contract review, DA and construction certificate review and legal documentation.
Yes. Mid-project refinance is possible where the existing funder is unable to complete the build, pricing has become unsustainable or additional facility is required. Timing and cost must be carefully managed.
Funded projects include residential apartments, townhouses, house and land, commercial offices, retail, industrial sheds, mixed-use, englobo and land subdivision, and specialist property such as medical, childcare and build-to-rent.