Property development finance in South West Sydney

Property development finance in South West Sydney funds a project in stages. Money is released as work is completed and independently verified, and the lender judges the project's numbers as closely as it judges you.

Typical structure

There is a land component, then a construction facility drawn down progressively, with each claim checked by a quantity surveyor. It resembles a construction loan on a larger scale. Interest is commonly capitalised, meaning it is added to the loan during the build.

Repayment

The facility is cleared when the finished dwellings sell, or it is refinanced into a longer term investment loan if you are keeping them.

What the lender weighs up

The lender looks at end value, total cost, margin, your experience, the builder's capacity and your exit.

Local considerations

Much of the local activity is small scale, particularly duplexes in Panania, Revesby and Padstow. Council rules on lot width and size, flood affected land near the Georges River and conditions of consent all shape how a lender views a site.

Where to begin

Infinity Mortgage Brokers arranges development finance for projects around Bankstown. For two dwelling projects, begin with our guide to dual occupancy loans.

A lender will fund a property development up to the lower of two limits: a share of total development cost and a share of the project's end value. Your own equity covers the rest.

Total development cost

This is everything it takes to deliver the project: land, construction, consultants, council contributions, finance costs and a contingency.

Gross realisation value

This is what the completed dwellings are expected to sell for in total.

How lenders differ

The major banks sit at the conservative end on both ratios and expect presales and a proven track record. Non bank and private lenders will lend a higher share of cost, in exchange for a higher rate and line fee.

Your equity

It normally goes in first, ahead of the lender's money. If you already own the site, most lenders will credit it at today's market value, not the price you paid. That helps owners who have held land in suburbs such as Peakhurst or Picnic Point for years.

Comparing structures

Infinity Mortgage Brokers lays out several funding structures side by side for South West Sydney developers, so the real cost of each is clear. Equity can also come from another property, as our guide on how to access the equity in your home explains.

Presales are usually required for property development finance from a bank, but often not from a non bank or private lender. You pay a higher rate for that freedom.

Bank expectations

Banks want enough exchanged, unconditional contracts, with deposits paid, to cover an agreed share of the debt. They also check who the buyers are and limit sales to related parties and overseas purchasers.

The non bank alternative

Funding with no presales is widely available for smaller projects, such as the duplex and townhouse sites common in Peakhurst, Picnic Point and Panania. The lender is carrying more sales risk, so the rate is higher.

Deciding between them

Compare two numbers. One is the extra interest you would pay on a no presale facility. The other is the discount you would give buyers to sell off the plan early. Whichever is smaller points to the better path.

Checking demand

Buyer demand matters too, so check which suburbs are growing fastest. Infinity Mortgage Brokers in Bankstown runs this comparison with you before any marketing begins.

Before approving a development site in Bankstown, lenders need a credible feasibility, planning approval, a fixed price building contract and a clear exit. A full submission contains:

• A feasibility showing total cost, end value, profit and margin on cost

• Development consent, or a realistic approval pathway

• A fixed price contract with a licensed builder, with evidence of the builder's capacity and insurance

• A valuation on both an as is and an as if complete basis

• A quantity surveyor's report confirming the build cost

• Your record of completed projects

• The exit, either sale or refinance to a long term loan

Site checks that matter locally

Confirm that the lot meets the council's minimum width and area for the development you want. Look at flood mapping near the Georges River, easements and stormwater requirements. In the bushland suburbs around Menai, Bangor and Barden Ridge, check bushfire ratings too.

Plan the exit early

If you intend to keep the finished dwellings, arrange the long term investment loan at the same time. See our guide to building a property investment portfolio.

Doing it in order

Infinity Mortgage Brokers reviews the investigations first, which avoids conditional approvals that fall over later.