Townhouse Development Finance

Finance to acquire a site, refinance land debt and construct townhouses, structured around your equity, builder, presales and planned exit.

$14.65 Million Secured for a 20-Townhouse Development

The Brokerage arranged a non-bank facility for a Queensland townhouse development with limited presale requirements.

Project detail	Funding arranged
Development	20 townhouses
Loan amount	$14,650,000
Loan-to-value ratio	75% of the as-if-complete market value, excluding GST
Loan-to-total-development-cost ratio	90%, excluding GST
Debt presale coverage	30%

Debt presale coverage measures qualifying presale proceeds against the loan debt.

These figures relate to this individual transaction, published in February 2025. Funding terms depend on the project and lender assessment.

Who We Help

Townhouse development finance can suit:

Developers purchasing a site with townhouse development potential.
Landowners seeking construction funding for an approved project.
Developers refinancing existing site debt before construction.
Borrowers seeking finance with limited or no presales.
Developers planning to sell, retain or partly retain the completed townhouses.
First-time developers with sufficient equity and a credible delivery team.

We assess the project, borrower and proposed delivery arrangements before identifying suitable funding options.

Finance from Site Acquisition to Construction

The funding required changes as your project progresses.

Site acquisition:

Finance to purchase development land, subject to its location, planning position, valuation and proposed exit.

Pre-construction:

Funding to hold or refinance the site while approvals, designs and construction arrangements are finalised.

Construction:

A development facility that releases funds progressively as approved works are completed.

Completion:

Repayment through townhouse settlements, refinancing retained properties or arranging finance for eligible unsold stock.

An acquisition loan should be considered alongside the eventual construction facility. Changing lenders later can introduce additional fees, valuations and settlement requirements.

Are You Selling, Retaining or Doing Both?

Your intended exit affects the funding structure from the outset.

Your plan	What the funding needs to address
Sell all townhouses	Sales assumptions, presales where required, settlement timing and agreed debt repayments
Retain all townhouses	Completed valuations, expected rental income, servicing capacity and eligibility for longer-term finance
Sell some and retain others	Individual release requirements, debt remaining after sales and refinancing the retained properties

If you intend to keep townhouses, the proposed refinance needs to be assessed before construction begins. Expected rental income alone does not establish that the development debt can be refinanced.

What Can Townhouse Development Finance Cover?

Depending on the facility, eligible costs may include:

Land acquisition or refinancing existing site debt.
Demolition and site preparation.
Townhouse construction.
Civil works, drainage and service connections.
Shared access, landscaping and common infrastructure.
Approved professional and statutory costs.
Construction contingency.
Interest and finance costs allowed within the facility.

We review which costs the lender will fund, which you must contribute and when those contributions are required.

The total facility limit can include land debt, interest and fees. The amount available to pay construction claims may therefore be lower than the approved loan amount.

What Lenders Assess

A townhouse development loan is assessed against the whole proposal.

Key considerations commonly include:

The site: Location, zoning, approvals, access and development constraints.
The townhouses: Dwelling mix, design, buyer demand and comparable sales.
The budget: Construction costs, professional fees, contingency and finance costs.
The delivery team: Developer experience, builder capability and project management.
The borrower: Financial position, existing commitments and available equity.
The security: Land value, completed value and any additional security.
The exit: How and when the facility will be repaid.

A profitable feasibility is one part of the assessment. The lender also needs confidence that the project can be completed and the debt repaid.

Your Builder and Contract Matter

Builder selection can affect lender appetite, funding conditions and the timing of construction approval.

Lenders may review:

Licensing and relevant insurance.
Experience delivering projects of comparable size.
Financial capacity and current workload.
The construction contract and payment schedule.
Exclusions, provisional sums and variation provisions.
The relationship between the builder and developer.

A fixed-price contract can help establish the budget, but exclusions and variations still need to be understood.

If you are acting as both builder and developer, or engaging a related business, raise this early. Some lenders require additional assessment or a different funding structure.

A Feasibility That Accounts for the Full Project

Your feasibility should show more than land cost, construction cost and expected sales.

Include acquisition expenses, consultant fees, statutory charges, infrastructure works, marketing, selling costs, finance costs and a realistic contingency.

The cash-flow forecast should also show when those costs arise.

Test the effect of:

Lower sale prices.
Higher construction costs.
A longer construction period.
Slower sales and delayed settlements.

These changes can increase the funding required while reducing the amount available to repay the loan.

How Much Can You Borrow?

Two measures commonly influence the facility limit:

Measure	What it compares
Loan-to-value ratio — LVR	The loan against the lender-accepted property valuation
Loan-to-cost ratio — LTC	The loan against the lender-accepted development costs

The relevant valuation may be the land’s current value or the development’s assessed value on completion. The lender determines which basis applies.

We also check whether calculations include or exclude GST and which costs are recognised. Percentages using different valuation or cost definitions are not directly comparable.

The final facility must satisfy the lender’s limits and provide an acceptable funding position throughout construction.

How Much Equity Will You Need?

Your contribution depends on the project, existing debt, accepted valuation, eligible costs and proposed facility.

Equity may come from cash, land value above existing debt or additional security acceptable to the lender.

Owning the site outright does not automatically remove the need for further cash. You may still need to cover costs outside the facility, contribute equity before construction drawdowns or maintain funds for overruns.

We assess both the contribution required at settlement and the cash you may need during the project.

Townhouse Development Finance with Limited or No Presales

Some lenders consider townhouse construction finance without presales. Others require qualifying contracts before construction funds can be released.

Assessment can depend on:

Project size and location.
Valuation and evidence of buyer demand.
Developer and builder experience.
Equity contribution and gearing.
Expected construction and selling periods.
The proposed repayment plan.

Where presales are required, lenders may assess contract terms, deposits, purchaser concentration and qualifying proceeds against the debt.

We review the actual funding condition so you understand what must be achieved before construction can commence.

$6.735 Million Arranged with No Presales

The Brokerage secured a $6,735,000 capitalised facility for a boutique townhouse development in South East Queensland.

The funding supported the developer’s plan to commence construction without presales.

The transaction also involved a third-party builder with limited experience at that project scale. The Brokerage worked with the parties to address the associated funding hurdles.

This transaction was published in September 2025. It demonstrates a funding arrangement for that project; it does not establish eligibility for every no-presales development.

How Construction Drawdowns Work

Construction funding is generally released progressively against approved claims.

Depending on the facility, a drawdown may require:

A claim consistent with the construction contract.
Evidence of completed works.
Inspection or quantity surveyor certification.
Confirmation that the remaining funds can cover the cost to complete.
Satisfaction of the lender’s other drawdown conditions.

An approved facility does not make every builder invoice immediately payable.

The contract payment schedule, claim assessment process and available contingency need to work together. Variations and overruns should be addressed before they create a funding shortfall.

Interest, Fees and the Loan Term

Compare the expected total funding cost alongside the interest rate.

Costs may include establishment fees, line or commitment fees, valuation, legal work, quantity surveying, drawdown charges, mortgage releases and extensions.

Some facilities allow interest to be capitalised within an approved allowance. This reduces the need for regular cash interest payments but increases the debt and uses part of the facility.

Other facilities require interest to be paid during construction.

The loan term should allow for construction, required certifications, title registration and the intended sales or refinance period. Delays can increase interest costs and create a need for an extension.

Completion, Titles and Townhouse Settlements

Physical completion is one step toward repaying the development facility.

Individual settlements may also depend on:

Required completion or occupation documentation.
Completion of shared infrastructure and approval conditions.
Registration of the relevant titles.
Purchaser settlement readiness.
The lender’s agreed mortgage release requirements.

Confirm the repayment required to release each townhouse before entering sales contracts.

The lender may require a substantial portion of settlement proceeds to reduce the loan. Sale proceeds are not automatically available for distribution to the developer.

Finance for Retained or Unsold Townhouses

If you plan to retain completed townhouses, assess longer-term investment lending before the development loan expires.

That assessment may consider rental income, servicing capacity, ownership structure, completed valuations and the debt remaining.

If sales take longer than expected, residual stock finance may provide another pathway for eligible completed properties.

Neither option is automatic. The remaining stock, loan balance and proposed exit must meet the new lender’s requirements.

Refinancing an Existing Townhouse Project

We can review funding for projects with existing land debt, approaching facility expiry or a need for construction completion finance.

The assessment will depend on:

Current debt and payout costs.
Work completed and verified cost to complete.
Remaining approvals and contractual obligations.
Builder performance and any disputes.
Available equity.
Presales, completed sales and the proposed exit.

If your current facility is under pressure, seek a review early. More time allows the funding position and outstanding conditions to be assessed before expiry.

Documents Commonly Required

A detailed lending submission may require:

Project information	Borrower and funding information
Site address, title details and purchase contract	Borrowing entity and ownership structure
Approved plans and approval conditions	Financial statements and assets and liabilities
Project feasibility and cash-flow forecast	Existing loan balances and facility documents
Construction contract and builder details	Evidence of available cash or equity
Construction programme and cost breakdown	Developer experience and previous projects
Sales evidence and any presale contracts	Proposed sales or refinance exit

For an initial discussion, start with the site, proposed townhouse count, approval status, estimated costs and funding required.

We can then identify the additional information needed for assessment.

How We Approach Your Townhouse Funding

1. Review the project

Understand the site, project stage, ownership, debt, budget and intended exit.

2. Assess the funding position

Identify available equity, potential funding gaps and the requirements likely to affect lender appetite.

3. Prepare the submission

Present the project, borrower, builder and repayment plan with supporting information.

4. Compare suitable options

Review eligible bank and non-bank facilities, including costs, security, presales, drawdowns and release conditions.

5. Coordinate the funding process

Work through lender assessment, valuation, documentation and settlement conditions.

Our teams in Brisbane and Sydney assist developers with projects across Australia, subject to lender location and project criteria.

Townhouse Development Finance FAQs

Can I arrange finance before development approval?

Some lenders consider site acquisition or pre-development funding before approval. Construction funding usually requires the relevant approvals and supporting documentation. The acquisition and construction stages may need separate facilities.

Is a two- or three-townhouse project always financed with a residential loan?

The dwelling count alone does not determine the lending pathway. The project’s purpose, ownership, intended sale or retention and lender policy all influence the assessment.

Can a first-time developer obtain finance?

Some lenders consider first-time developers. A credible feasibility, adequate equity and an experienced builder and consultant team can strengthen the proposal. Your own financial position remains relevant.

Can the borrower be a company or trust?

Lenders may consider company and trust borrowers. The entity structure, ownership, guarantees and security requirements need to be reviewed as part of the application.

Can I act as both builder and developer?

Some lenders consider this arrangement, while others require an independent builder. Relevant experience, financial capacity, construction controls and the proposed contract structure will affect the available options.

How long does approval take?

Timing depends on the lender, submission quality, valuation, builder assessment, legal documentation and outstanding conditions. An indicative offer is an early step; formal approval and access to funds require further work.

Discuss Your Townhouse Project

Tell us where the site is, how many townhouses you propose, your approval status and whether you intend to sell or retain them.

We’ll review the funding requirement, available equity and information needed to assess suitable lending options.

Call: 0451 973 662 Email: enquiries@thebrokerage.au

Finance is subject to lender assessment, approval and facility conditions.