FUNDAMENTALS
What Is Property Development Finance?
Property development finance is a specialist form of lending used to fund the acquisition of a site and the construction of new dwellings on that site. Unlike a standard home loan, it is sized to a project, drawn in stages, and repaid from the sale (or refinance) of the completed units. Below is how it actually works in Australia in 2026, and what you should look for when comparing offers.
The two phases of a development loan
A development facility is almost always written in two phases. The land (or acquisition) phase funds the purchase of the site. The construction phase then funds the build progressively, drawn against quantity-surveyor verified progress claims.
Many developers think of these as two separate loans, but in practice they are usually one facility with two limits. The advantage of a single-lender structure is that you avoid refinancing risk between settlement and construction commencement - the same lender simply moves you onto the construction tranche when council and design approvals are in place.
How lenders size the loan
Three numbers do most of the work: LVR (loan to value, against the as-is land value), LVC (loan to cost, against total development cost), and LVGR (loan to gross realisation, against the end value of the completed project on an inc-GST basis).
A typical Australian non-bank development loan sits at up to 80% of total development cost and up to 65% of gross realisation. Major banks tend to sit lower on both, and require a higher equity contribution from the developer.
Banks usually require 100% debt cover from qualifying presales before they will fund construction. Non-bank lenders like Blackfort do not - see our no-presales guide for how that works in practice.
What the lender is actually underwriting
A development lender is not underwriting your serviceability the way a home-loan lender is. There is no monthly principal-and-interest repayment to service - interest is capitalised inside the facility and repaid from end sales.
Instead, the lender is underwriting three things: the site (zoning, planning approvals, comparable values), the build (the builder, the contract, the quantity surveyor's report), and the take-out (the realistic price you can achieve once the project is complete).
Capitalised interest, in practice
Because there are no monthly payments, the lender funds the interest by drawing it from inside the facility each month. That has two consequences: you preserve cashflow during the build, but the facility limit needs to be large enough to absorb the full capitalised interest cost across the loan term.
When you compare offers, make sure you are comparing total cost of capital - not just the headline rate. A 1% line fee, a 9% rate, and an 18-month term produce a very different total than a 0.5% line fee, a 10% rate, and a 14-month term.
Who provides development finance in Australia
Four broad groups: the major banks (slow but cheap on the deals they accept), tier-2 banks (more flexible than majors but still presale-driven), non-bank lenders backed by institutional capital (faster, no presales, slightly higher coupon), and pure private/family-office credit (highest cost, fastest, smallest deal size).
Blackfort sits in the third category - non-bank, backed by institutional capital including La Trobe Financial, writing loans up to $50m at LVR up to 80%, with no presales required and indicative terms in minutes.
Where to go next
If you have a specific deal you are sizing, the fastest path is to enter the site address on the homepage and generate indicative terms in minutes. If you want to read more first, the no-presales guide explains how non-bank construction finance is structured, and residual stock finance covers what happens once the project is built.
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