Mortgage for Property Development

A mortgage for property development gives you the structured finance to fund land acquisition, construction, and project completion — whether you're developing townhouses, apartment complexes, commercial buildings, or mixed-use projects. Smart Mortgage Corp works with specialist lenders across Australia to secure the right property development mortgage for your project size and experience level.

What is a Property Development Mortgage?

A property development mortgage is a short-term specialist loan designed to fund property development projects, covering: ✔ Land acquisition costs ✔ Construction costs ✔ Council and approval fees ✔ Professional fees (architects, engineers, consultants, etc.) ✔ Marketing and sales costs for completed units Unlike a standard mortgage, a property development mortgage is structured in stages (drawdowns), where funds are released at key project milestones, ensuring cash flow is managed efficiently throughout the build.

Types of Development Finance

Senior Debt (First Mortgage Finance)

- The primary loan secured against the property. - Covers up to 65-75% of Total Development Costs (TDC). - Repayments may be interest-only during the construction phase. - Typically provided by banks and major lenders.

Mezzanine Finance

- A secondary loan used to reduce the developer’s capital contribution. - Sits behind senior debt, increasing overall leverage. - Can extend funding to 85-90% of TDC. - Higher risk = higher interest rates.

Private & Non-Bank Development Finance

- Offers flexible lending criteria and higher LVRs. - Faster approvals compared to traditional banks. - Suitable for projects with unique structures or limited pre-sales. - Interest rates vary based on risk and lender type.

Joint Venture (JV) & Equity Finance

- Investors or equity partners provide capital in exchange for a share of project profits. - Reduces the need for traditional debt but requires profit-sharing agreements.

How Much Can You Borrow?

When assessing your development mortgage application, lenders look at:

Loan-to-Cost Ratio (LTC)

% of total development costs covered (typically 65-75%).

Loan-to-Gross Realisation Value (LVR or GRV)

% of completed project value that can be borrowed (typically 60-70%).

Pre-Sales & Pre-Leasing Requirements

Some lenders require a percentage of units pre-sold before releasing funds.

Developer Experience

More funding options for developers with a proven track record.

How Development Finance is Drawn

1. Land Acquisition

The first drawdown funds the purchase of the development site. Interest is charged only on this initial amount while you prepare for construction.

2. Construction Drawdowns

Funds are released in progress payments as each construction milestone is reached — slab, frame, lock-up, fixing, and practical completion. The lender inspects the site before each release.

3. Completion & Exit

Once the project is complete, the facility is repaid through settlement of sales or refinanced into a long-term investment loan. A clean exit strategy is something lenders look for when approving a development mortgage upfront.

Essential Steps and Key Points in Property Development

Responding to Population Growth: Developers Challenges and Strategies in Australia's Housing Market

Property development mortgage FAQs

A property development mortgage (also called construction finance or development finance) is a specialist loan used to fund the construction or development of residential or commercial property. Unlike a standard mortgage, funds are drawn progressively at each construction milestone rather than provided as a lump sum — so you only pay interest on the amount drawn at any time.

Most lenders will finance up to 65–70% of the total development cost (TDC) or as-if-complete valuation (GRV), whichever is lower. The exact amount depends on your project type, location, developer experience, and pre-sales achieved. Our brokers work with specialist lenders to maximise your borrowing capacity for the development mortgage.

We arrange property development mortgages for residential subdivisions, townhouse and apartment developments, mixed-use projects, commercial developments, and land banking. Our brokers work with specialist lenders across Australia to match the right mortgage structure to your project.

A property development mortgage is drawn in stages tied to construction milestones — such as slab, frame, lock-up, fixing, and practical completion. The lender carries out progress inspections before releasing each drawdown. Interest is only charged on the drawn balance, which helps manage cash flow throughout the project.

Requirements vary by lender. Some lenders require prior development experience to approve a development mortgage; others work with first-time developers who have a strong project, an experienced builder, and a solid feasibility study. Our brokers match you with the right lender for your experience level and project profile.

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What our customer says about us

Testimonial

What our customer says about us

I have been with Ivy for 10 years. Ivy always exceeds my expectation and makes me feel my needs are a priority. Her professionalism and knowledge are of an extremely high standard and the communication and efficiency throughout the whole process was above and beyond. More than happy with the service from Ivy and Smart Mortgage and would not hesitate to recommend their services to others.

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Onsite Manager of Rosewood Heights

My family uses Smart Mortgage to assist with the purchase of our home, investment, properties and commercial lending. Ben Ou, the Manager Director and his team are very experience and have always made our loan processes easy. I would highly recommend Smart Mortgage to my friends and clients who require finance for their properties. I am confident that the Smart Mortgage’s team will look after the customer’s best interests.

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RE/MAX Number 1 Sales Team

Having worked with Angela for over 10 years, she has always been very professional and always puts my needs and interests first. Her work ethic is excellent and I trust in her abilities to always provide me with honest advice to help me reach my financial goals. My husband and I have several home and commercial properties with Smart Mortgage and I would highly recommend them to anyone who is looking for a company who truly puts your interests first.

Anh Pham

Manager at Queensland Soy Factory

I have dealt with Smart Mortgage for many years. There have been a few properties I have bought and sold over this period. Angela Duong is the person I have dealt with for my home loans. I have known Angela for over 10 years and have always found her and the staff at Smart Mortgage to provide outstanding services. Buying and selling houses are some of the most stressful things a person can go through in life. Knowing that Smart Mortgage are very professional and committed to the complete process from start to finish is a great relief.

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Property Buyer

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