A construction loan funds a build in progress draws released against the program as work is completed. We arrange commercial construction funding through non-bank and private lenders for developers and builders who need leverage, speed or a structure outside bank appetite. It is business-purpose finance, not a consumer home loan.
Rather than advancing the full amount up front, the lender funds the build in stages. Each progress draw is released as a stage is reached, usually verified by a quantity surveyor, with a retention held until practical completion. Gearing is measured against both the total development cost and the end value, so the facility tracks the feasibility rather than a single loan-to-value number.
The drivers are the loan to cost (LTC), the loan to value against end value (LVR), the level of presales, the strength of the builder and a clear takeout or sell-down. We do not advertise a standard rate or leverage cap because they move with each of those factors. As a general guide, the more presale cover and the lower the gearing, the keener the pricing; a higher-leverage, low-presale structure carries a higher cost and is more likely to need a non-bank lender.
Banks often require substantial presale cover and conservative leverage. A non-bank or private construction lender can consider reduced or nil presale, higher gearing or a tighter timeline, where the feasibility and exit support it.
A construction loan is the senior facility that funds the build itself. Development finance is the broader strategy that may also layer in mezzanine, preferred equity or stretched senior to lift total leverage across land and build. Many projects start as a single construction facility and grow into a full development funding stack as the feasibility is optimised.
We structure construction funding to protect return on equity, not just to clear the lowest rate. Higher gearing on a deal that supports it can mean less equity tied up and less profit diluted at completion, though the outcome always depends on the project performing and the market at sell-down.
Not always. Bank facilities typically require presale cover, but some non-bank and private lenders will consider reduced or nil presale where the feasibility, gearing and exit support it. The settings are deal-dependent.
In progress draws against the build program, usually verified by a quantity surveyor, with a retention held until practical completion.
Often interest is capitalised within the facility through construction and settled at the end, rather than serviced monthly, though this depends on the lender and the structure.
Yes. Many facilities fund the land acquisition and the construction together; higher-leverage structures may add mezzanine or preferred equity to reach the required loan to cost.
Tell us about the project, the numbers, and the timeline. We will give you an honest read on whether we can fund it and what a suitable structure could look like. Email loans@bottomlinefinance.com.au or send the form.
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