Development Finance Guide for New Investors in Australia
Development finance at WizWealth.com.au is a practical way to fund a feasible project using a clear exit strategy rather than your personal income. If you’re weighing property development loans, mapping out property development finance, or exploring construction finance, this page explains how lenders consider end value, why profitability is decisive, and where finance for property development and housing development finance fit for townhouses or small apartment projects.
What Is Development Finance?
In plain English, development finance funds a project based on its feasibility and the expected value once complete. Most property development loans are not serviced by your PAYG income; repayment comes from a planned exit—presales and settlements, or refinance at completion.
That’s why many investors compare property development finance options early. Where a regular investment loan focuses on current valuation, both construction finance and housing development finance look harder at feasibility assumptions, builder capability, contingency, program, and forecast end value (GRV)—the bedrock of smart finance for property development.
How It Works: Exit Strategy & End Value (GRV)
Exit over income
With development finance, lenders prioritise the exit (sales/refinance) over wages. That’s why strong sales strategy, valuation evidence, and timeline realism often carry more weight than traditional debt-to-income ratios in property development loans.
LVR sized against the finished product
A core distinction in property development finance is that leverage may be assessed against GRV—the expected value of the completed stock. In practice, suitably profitable deals can access stronger leverage than vanilla loans, subject to risk settings that govern finance for property development.
Profitability is non-negotiable
Whether it’s construction finance for a duplex or housing development finance for townhouses, lenders look for robust gross profit to buffer delays and cost pressures. In short, better margins make better development finance.
When This Funding Is a Good Fit
- Feasibilities that remain profitable under sensitivity tests—ideal candidates for property development loans.
- Builds with milestone drawdowns, where construction finance aligns cash flow to delivery.
- Townhouse or small apartment schemes suited to housing development finance.
- Capital-efficient pathways where finance for property development reduces upfront equity strain (subject to feasibility).
Strong presale strategy, a fixed-price build contract, and a realistic program help your property development finance narrative stand out.
Worked Example (Numbers That Stack Up)
Consider 8–10 townhouses with total project cost of $5.5m and GRV of $7.0m, leaving a resilient margin after contingency. A lender providing property development loans may size the facility principally off GRV with staged drawdowns. The development finance exit is settlement of sales, or refinance into investment facilities at completion—hallmark mechanics of prudent finance for property development.
For medium infill, familiar construction finance rules still apply—clean feasibility, disciplined contingencies, conservative GRV assumptions—standards echoed in housing development finance and wider property development finance.
Step-by-Step: From Feasibility to Exit
Scope & Site (Pre-Feasibility)
Assess zoning, yield, and services. Early engagement with WizWealth.com.au sharpens your property development finance positioning before signing build terms.
Numbers That Matter (Feasibility)
Robust feasibilities anchor development finance. Include builder quotes, design detail, soft costs, and sensitivity tests—vital for housing development finance.
Build Contract & Program (Delivery)
Align drawdowns for construction finance with milestones (slab, frame, lock-up, fit-off). A fixed-price contract plus a capable builder supports property development loans.
Exit Strategy (Sales or Refinance)
The exit underpins finance for property development. Presales, marketing, and valuation support are how property development finance is repaid—not your PAYG income.
Documentation Checklist
- Feasibility report with sensitivities (development finance essential).
- Builder profile, fixed-price contract, insurances (construction finance requirement).
- Presale strategy and evidence (property development loans often request this).
- Independent valuation & QS reports (core to property development finance).
Costs, Risks & How to Manage Them
Funding costs
Pricing for development finance reflects project-specific risk and can be higher than standard investment lending. With a resilient feasibility, overall return can remain attractive—one reason investors prefer tailored property development loans.
Key risks
- Market softening after DA or during build (address with conservative property development finance assumptions).
- Build delays or cost creep (buffer via construction finance contingencies).
- Valuation gaps at completion (plan multiple finance for property development exit scenarios).
Practical safeguard
Lenders see hundreds of deals. Clear feasibility, conservative assumptions, and decisive exit make stronger development finance proposals.
FAQs
Do I need a strong salary to qualify for development funding?
Generally, no. In development finance and related property development loans, lenders focus on feasibility and exit rather than day-to-day income.
What makes a proposal bankable?
Realistic GRV, sensible contingencies, builder capacity, valuation support, and a clear exit. These are universal in property development finance, whether arranging construction finance or seeking housing development finance.
Can the facility cover most project costs?
Facilities are sized by feasibility and end value. With strong profitability, leverage in finance for property development can be materially higher than a vanilla investment loan—subject to lender criteria and risk.
Speak with WizWealth
If you’re assessing development finance for your next project, the WizWealth.com.au team can help you frame the feasibility, align drawdowns, and plan the exit. Whether you’re comparing property development loans, evaluating construction finance, exploring housing development finance, or seeking tailored property development finance guidance, we’ll help you present a bankable story from day one.
