Development finance · Property owners
Development finance for property owners
Property owner business finance is lending where the applicant or director owns residential or commercial real estate, which widens the lender panel and lowers pricing even when the property is not offered as security.
How development finance works for property owners
Property owners with development experience and equity sometimes move from occupying commercial property to developing it — a small industrial subdivision, a few townhouses, or an extension to an existing site. Development finance is drawn progressively against construction milestones and assessed on feasibility, builder capability, presales and exit strategy rather than on trading cash flow. It is a specialised product with genuine risk, and it needs proper feasibility work before an application makes sense.
The cash-flow pattern we plan around
Business cash flow assessed alongside personal property equity, which lenders treat as a buffer even where no security is taken over the property.
What property owners typically fund
- Larger facility limits than an unsecured position allows
- Lower-cost funding for expansion or acquisition
- Consolidating expensive short-term business debt
- Buying commercial premises for the business
Development finance for property owners: the numbers
| Typical amounts | $500,000 – $50,000,000 |
|---|---|
| Term | 6–36 months |
| Indicative rates | 7.5% – 10% p.a. |
| Repayments | Interest capitalised during construction, principal repaid at settlement |
| Speed | 4–12 weeks depending on lender and project complexity |
| Documents property owners usually need | ABN and business financials or bank statements · Rates notice and current mortgage statements for the property · Personal asset and liability statement |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Property-backed business lending
Property-backed business lending is finance secured by residential or commercial real estate owned by the business or its directors, offering longer terms and lower rates than unsecured lending in exchange for putting that property at risk.
Property ownership pricing benefit
The property ownership pricing benefit is the lower rate and higher limit many Australian lenders offer a director who owns real estate, applied even when no security is taken over that property.
What is development finance?
Development finance is short-term property lending used to fund construction or subdivision. Funds are drawn progressively against certified building milestones and the loan is repaid from the sale or refinance of the completed project.
What is gross realisation value?
Gross realisation value is the total expected sale value of a completed development, usually assessed by an independent valuer. Lenders cap borrowing at a percentage of GRV, commonly around 65%, as a primary risk control.
What are presales in development finance?
Presales are unconditional contracts on units or lots signed before construction begins. Bank lenders often require presales covering 60–100% of the debt; non-bank and private lenders may reduce or waive that requirement at a higher rate.
What is capitalised interest?
Capitalised interest is interest added to the loan balance during construction instead of being paid monthly. It removes repayment pressure while there is no project income, but increases the amount owing at completion.
Questions from property owners
Does owning property get me a better business loan rate?
Usually, yes, even when the property is not used as security. Lenders treat a director’s property equity as a buffer, which widens the lender panel, lifts limits and lowers pricing on unsecured loans and equipment finance. Offering the property as security lowers the rate further and extends the term, at the cost of tying the property to the debt.
Should I secure a business loan against my home?
It depends on the amount, the term and your appetite for risk. A secured loan is the cheapest and longest-term business money available, which suits large, long-lived purposes such as buying premises, a business or consolidating debt. For shorter needs, an unsecured facility priced with your property in the background often costs little more and keeps the home separate.
Can I use equity in my home or investment property for the business?
Yes. An equity release or a business loan secured against residential or commercial property can fund expansion, equipment, a deposit on premises or working capital, typically up to 80 per cent of the property’s value less existing loans. Interest on the business-use portion is generally deductible. Your accountant confirms the treatment.
Can I buy my business premises instead of renting?
Yes. A commercial property loan funds an owner-occupied premises at typically 70 to 80 per cent of the value, with the business paying rent to itself or to a self-managed super fund that owns the property. Owning existing property helps with the deposit and pricing. Lyft Financial handles commercial property lending.