BLOX offers tailored funding solutions for property development projects. Our team knows the ins and outs of development finance, so you can have the funding to bring your multi-unit developments to life.
Finance is designed for property development. Interest is capitalised into the loan, and funds are released in stages as you progress.
We’ll help you develop and present your exit strategies, including pre-sales plans, to meet lender requirements and get funded.
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Our team will help with feasibility assessments, hard and soft costs and structuring your finances to maximise project viability and profit.
At BLOX, we're ready to help you navigate the complexities of construction finance and bring your vision to life.
Get startedDevelopment finance is different to a standard loan for property development:
- It’s an interest-only facility.
- Interest is capitalised into the loan, so you don’t make repayments during the development.
- The loan term is short, usually 18-24 months.
- There’s an exit strategy, usually selling the developed properties to repay the loan.
Pre-sales are a risk mitigation strategy for lenders:
- Unlike a standard loan, development finance isn’t approved based on ongoing income but a defined exit strategy.
- Pre-sales prove your exit strategy is actual and sufficient to clear the debt or minimise to an acceptable amount
- They give the lender confidence there’s market demand for your development.
- The number of pre-sales required can vary but often covers much of the total debt.
- In some cases, strong pre-sales may give you better loan terms.
Development finance is more expensive because:
- It’s a short-term facility, 1-2 years, so lenders seek to recover their costs witin that short time frame
- Property development is high risk due to delays, cost blowouts and market fluctuations.
- The higher rates and fees are for this increased risk.
- Depending on the project and market conditions, rates can be 7-10% or more,.
- While costs are higher, in an ideal scenario, these fees are capitalised into the loan and are not paid out of pocket.
- The returns from a successful development may potentially outweigh these higher costs.
Development finance and construction loans have:
Development Finance
- Larger, multi-unit projects
- Interest is capitalised
- Requires an exit strategy, often property sales
- Requires pre-sales
- Higher rates and fees
Standard Construction Loan
- Single dwellings or smaller projects
- Interest is paid monthly
- Based on long term serviceability
- Lower rates and fees
- Converts to a standard home loan after construction
Development finance is for:
- Duplex houses to multi-unit townhouses and apartments
- Single dwelling spec homes
- Mixed-use
- Land subdivisions
- Large-scale renovations or conversions
- Commercial property
The criteria can vary between lenders, but these projects are generally too big or too complex for a standard construction loan. BLOX can help you determine if your project is eligible for development finance and walk you through the application process.
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