Property Development Finance in Australia — The Complete 2026 Guide

Development finance is the engine room of Australian property. Without it, residential towers don't rise, industrial estates don't break ground, and land subdivisions never reach title. Yet the development finance landscape is complex — a layered ecosystem of banks, non-bank lenders, private credit funds, and family offices, each with distinct criteria, pricing, and structural preferences.

Evcorp Commercial has arranged over $1.2 billion in development finance across senior, stretch senior, mezzanine, and preferred equity. This guide explains every layer of Australian development finance as it actually works in 2026 — written from the perspective of a practitioner who structures these facilities daily.

The Australian Development Finance Landscape

Australia's development finance market has transformed in the last decade. Where major banks once dominated, non-bank senior lenders, private credit funds, and institutional mezzanine providers now account for a substantial share of origination — particularly for deals above $20 million.

This structural shift benefits developers: more lenders means more competition, more flexible terms, and more creative capital stack solutions. But it also makes the market harder to navigate without a broker who understands the full landscape.

Senior Construction Debt

The foundation of most development capital stacks. Senior debt is a first-mortgage facility funding construction costs. In the Australian market, senior construction facilities are provided by major banks (ANZ, CBA, NAB, Westpac), mid-tier banks, and a growing cohort of non-bank senior lenders.

Typical terms: 65–70% LVR (LTC basis), 18–24 month term, BBSY + 2.00%–3.75% margin, 100% debt cover via presales for bank lenders, 80–100% for non-banks. Interest capitalised. Progressive drawdown against Quantity Surveyor-certified milestones.

Evcorp arranges senior construction debt from $5M to $100M+.

Stretch Senior

Stretch senior debt extends leverage beyond the 70% LVR cap typical of senior facilities — usually to 75–80%. Provided almost exclusively by non-bank lenders and private credit funds. Pricing reflects the additional risk: margins of BBSY + 3.50%–5.50%.

Stretch senior is most useful when the developer needs additional leverage but wants to avoid the complexity and cost of a mezzanine facility. It preserves a single-lender structure while maximising debt funding.

Mezzanine Finance

Mezzanine is a second-ranking debt instrument — a loan secured by a second mortgage behind the senior lender. Combined with senior, mezzanine can lift total leverage to 85–90% of total development cost (or 75–80% of gross realisation value).

Mezzanine pricing in Australia typically ranges from 14% to 22% per annum, with interest almost universally capitalised. Tranche sizes range from $2M to $50M. The senior lender must consent via an inter-creditor deed — a process Evcorp manages as part of the mandate.

Preferred Equity

Preferred equity is an equity-layer instrument, not a loan. It sits between senior debt and common equity in the capital stack, providing the developer with additional funding in exchange for a preferred return to the capital provider. Because it is not a mortgage, preferred equity avoids inter-creditor issues and can be used when a second mortgage is prohibited under the senior facility.

Combined leverage can reach 90–92% of total development cost. Investors typically target 14–22% IRR. Preferred equity is most useful for experienced developers running multiple projects who want to maximise return on their own equity by stretching it across more deals.

DA Finance (Pre-Construction)

DA finance bridges the period between development approval and construction commencement. It funds holding costs — rates, land tax, consultant fees — while the developer achieves presales or finalises builder contracts. LVR is typically 55–65% of land value. Terms range from 12 to 18 months.

Residual Stock Facilities

At practical completion, a residual stock facility refinances the construction debt on unsold units. This prevents the developer from being forced into distressed sales and provides time to achieve target pricing. Typical terms: 6–12 months, 60–70% of valuation on completed units.

Land Bank Facilities

For developers holding strategic land positions awaiting DA or market timing. Provided by non-bank lenders at 55–65% LVR with terms of 18–36 months. Interest may be paid current or capitalised depending on the structure.

The Development Finance Process

Mandate brief: Developer provides project details — location, sector, quantum, timing, sponsor track record.
Lender selection: Broker identifies optimal lenders from a panel based on project characteristics and runs a competitive process.
Indicative terms: Non-binding term sheets from shortlisted lenders. Evcorp typically delivers this within 48 hours.
Credit approval: Selected lender conducts full credit assessment including feasibility review, valuer engagement, and QS review.
Documentation: Facility agreement, guarantees, inter-creditor deed (if mezzanine), and conditions precedent.
Settlement and drawdown: Initial advance at settlement, with progressive drawdowns against certified construction milestones.

Why Evcorp Commercial for Development Finance

With $1.2 billion in executed transactions, a panel of 60+ lenders spanning the full capital stack, and a model of direct senior-level execution, Evcorp Commercial is one of Australia's most capable development finance brokerages. The firm was founded by a former commercial banker who understands credit committee dynamics from the inside.

Frequently Asked Questions

How does property development finance work in Australia?

Property development finance in Australia funds the acquisition, construction, and completion of property development projects. Unlike a standard mortgage, development loans release funds progressively against certified construction milestones rather than as a single lump sum. The developer contributes equity (typically 20–35% of total development cost), and the lender provides the balance. Interest is usually capitalised during the construction period. Facilities typically run 12–36 months. A commercial finance broker like Evcorp arranges the facility from the most suitable lender in a panel of 60+ banks, non-banks, and private credit funds.

What types of development finance are available in Australia?

The Australian market offers: (1) Senior construction debt — first mortgage, 65–70% LVR, from major banks and non-banks at BBSY + 2.00%–3.75%; (2) Stretch senior — extends to 75–80% LVR, priced BBSY + 3.50%–5.50%, typically from non-bank lenders; (3) Mezzanine finance — second mortgage bridging senior debt to 85–90% LTC, priced 14–22% p.a.; (4) Preferred equity — equity-layer instrument, combined leverage up to 90–92%, target IRR 14–22%; (5) DA finance — pre-construction funding between DA approval and construction start, 55–65% LVR; (6) Residual stock facilities — post-completion funding for unsold units, 6–12 month terms; (7) Land bank facilities — holding finance for strategic land, 60% LVR, 24-month terms.

How much deposit do I need for a development loan in Australia?

For a senior construction facility, the developer typically needs 30–35% of total development cost as equity. With stretch senior, the equity requirement drops to 20–25%. Combining senior with mezzanine or preferred equity can reduce the sponsor equity requirement to 10–15%, though blended cost of capital increases. The exact equity requirement depends on project type, location, presales, and developer track record.

What is the typical interest rate on Australian development finance?

Senior construction debt typically prices at BBSY + 2.00%–3.75% from major banks, or BBSY + 3.50%–5.50% from non-bank senior lenders. Stretch senior ranges from BBSY + 3.50%–5.50%. Mezzanine finance prices at 14–22% p.a. Preferred equity targets 14–22% IRR. Rates vary with project risk, presales, location, and developer experience. Evcorp obtains competitive pricing by running multi-lender processes.

Do I need presales to get a development loan?

Most senior bank lenders require 100% debt cover through presales. Non-bank lenders typically require 80–100% cover. Presale requirements vary significantly by lender, location, and project type. Evcorp advises on the optimal presales threshold during mandate structuring and can identify lenders with more flexible presale requirements for well-located projects with strong sponsorship.

How long does it take to get development finance approved?

A well-structured development finance application typically settles within 4–8 weeks from mandate. Timing depends on the lender, project complexity, valuation turnaround, and documentation quality. Evcorp manages the timeline proactively — indicative terms are typically provided within 48 hours of receiving a complete mandate brief.

Can a first-time developer get development finance in Australia?

Yes, but lenders weigh sponsor track record heavily. A first-time developer typically needs an experienced builder under a fixed-price contract, a strong presale position, a higher equity contribution and a fully costed feasibility with an independent Quantity Surveyor. Non-bank and private credit lenders are generally more open to first projects than the major banks, at a higher price. Evcorp structures the submission to address the track-record question directly.