Small townhouse subdivisions
2–10 townhouse projects, typically $1M–$8M total development cost. Suit emerging developers and high-net-worth owner-developers.
Property development finance
Senior, mezzanine and stretch senior debt for active developers
Property development is a leveraged business. The right capital structure can mean the difference between a 25% project IRR and a 70% project IRR — and the wrong structure can lock up working capital and choke profitable pipelines.
Our development finance practice structures the full debt stack. Senior debt with major bank and non-bank lenders, mezzanine and preferred equity from private credit funds, and stretch senior structures from lenders willing to go higher up the capital stack at the right risk premium.
We work with developers from first multi-unit project ($1M–$5M) through to institutional-grade developers running $50M+ apartment projects across multiple stages.
Project types
Development deals we structure
Mid-size residential developments
10–50 apartment or townhouse projects, $5M–$30M TDC. Most active segment of the Melbourne market.
Large apartment developments
50+ apartment buildings, $20M–$100M+ TDC. Senior debt typically major bank or major non-bank, with mezzanine from private credit.
Mixed-use developments
Residential plus retail or commercial on the ground level. Complex valuation and pre-sales criteria; specialist lenders preferred.
Land subdivision & civil works
Englobo land subdivision into developed lots. Often financed in stages, with sequential refinance as stages settle.
Industrial & commercial developments
Warehouse, last-mile logistics, office and retail developments. Typically tighter pre-lease covenants required for senior debt.
Capital structures
How development capital stacks together
Senior debt (60–70% TDC)
Lowest cost, first-ranking security. Major bank, second-tier bank or major non-bank. Generally requires 50%+ pre-sales for residential development senior debt.
Stretch senior (70–80% TDC)
Higher-leverage senior debt offered by non-bank lenders willing to go further up the capital stack at a higher rate. Reduces or eliminates need for separate mezzanine.
Mezzanine debt (80–90% TDC)
Subordinated debt sitting between senior debt and equity. Higher rate (15–25%) reflecting subordinated risk position. Provided by private credit funds and high-net-worth lenders.
Preferred equity
True equity-like instrument with preferred return ahead of common equity. Used for the top 5–15% of capital stack on larger developments.
Joint venture / equity partner
For larger projects, we can introduce equity capital partners — family offices, HNW investors and institutional capital — to share project risk and reward.
Land bank / pre-development
Land acquisition and DA (Development Approval) phase finance before construction starts. Generally non-bank lenders, shorter terms (12–24 months), refinanced into construction facility once DA is secured.
Client stories
Real outcomes for real clients
★★★★★
"The team made what felt like a daunting process completely manageable. We secured a rate the bank wouldn't touch directly and were in our first home eight weeks later."
★★★★★
"After years of being told no by the majors for our self-employed structure, MortgageHQ found a solution. Approval came within a fortnight and on competitive terms."
★★★★★
"We refinanced our commercial property and unlocked equity for a second purchase — they structured the whole deal across two lenders. Saved us hundreds of basis points."
Answers
Development finance — frequently asked questions
What pre-sales do I need to secure development finance?
Major bank senior debt typically requires 50–100% pre-sales covering the loan amount. Second-tier and non-bank senior often goes to 70–80% senior LVR with lower pre-sales (sometimes 30–50%). Stretch senior products from specialist lenders can have minimal pre-sales requirements but at significantly higher cost.
How much equity do I need to bring to a development?
Senior debt funds 60–70% of total development cost (TDC). Stretch senior or senior + mezzanine combined can fund up to 90%. So depending on the structure, you might need to contribute 10–40% of TDC as equity. On a $10M project, that's $1M–$4M of equity required.
What experience do I need to qualify for development finance?
First-time developers can get funded, but the lender pool is narrower and the project profile needs to be conservative (small, simple, well-located). Established developers with successful track records of 3+ completed projects access a much wider lender panel including major banks. Project consultants, builders and ARC-engagements matter to lender confidence.
What's the cost of development finance?
Senior debt: 7–11% currently (rate plus line fee). Stretch senior: 10–14%. Mezzanine: 15–22%+. Plus establishment fees (1–2.5% of facility), exit fees on some structures, and lender legal costs. We model the total cost of capital across the project, not just the headline rate.
Can MortgageHQ help with first-time small development projects?
Yes — small developments ($1M–$5M) are a meaningful part of our practice. First-time developers undertaking a 2–6 unit townhouse project are increasingly common Melbourne clients. We structure the deal, prepare the lender submission and manage the entire approval process.
What documentation do I need to apply for development finance?
Feasibility (DCF and stress-tested), DA documentation, registered architect's drawings, fixed-price builder's contract (or detailed cost estimate from QS), pre-sales contracts (where required), developer CV showing track record, and personal financials. We provide a checklist tailored to the project at the start.
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- Access to 60+ lender panel including major banks
- 25+ years of broker experience on every file
- We work with your accountant and advisers
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