Construction and development finance: how these deals are actually assessed
Development finance is the one commercial structure where the lender funds something that does not exist yet. The feasibility, not the borrower, carries the deal — and the money is released in stages against evidence.
A completed building can be valued and let. A development cannot, so the lender funds against a projection: what it will cost, what it will be worth, how long it will take, and who has already committed to buy or lease it.
That is why these facilities behave differently. Money is drawn in stages against certified progress rather than advanced at settlement, the borrower usually contributes first, and the lender's central question is not whether the borrower can service interest but whether the project completes at the cost stated.
For La Vitesse this arrives inside the commercial mix rather than as a separate product — development scenarios come through the commercial flow, not as their own lead type.
The feasibility
Costs, revenue, timeline and contingency in one document. Lenders test the assumptions rather than accept the total, and a feasibility with thin contingency reads as optimism.
Cost to complete
The governing constraint throughout. The lender must be satisfied that the remaining facility plus the borrower's equity finishes the project, at every stage, not just at the start.
Presales or pre-commitment
Sales exchanged or leases agreed before construction. It is how a developer converts a projection into contracted revenue, and requirements differ sharply by lender and by project type.
The builder and the contract
Who is building it, on what contract, with what track record and what capacity. A fixed-price contract with a capable builder is a different risk to a schedule of rates with an unproven one.
Quantity surveyor reports
An independent view of cost and progress, at the start and at each draw. The QS, not the borrower, certifies what has been built.
Approvals and conditions
Development approval, its conditions, and anything outstanding. Approvals with unresolved conditions carry timing risk that lands squarely inside the loan term.
Progress drawing is the mechanic that most surprises borrowers coming from ordinary property lending.
- Equity usually goes in first. The borrower's contribution is typically expended before the facility starts drawing, which changes the cash-flow profile at the front of the project.
- Draws are certified, not requested. A quantity surveyor verifies work completed and the lender releases against that certificate. Work done is not the same as work certified.
- Interest is generally capitalised. It accrues into the facility during construction rather than being serviced, which means a delay costs more than the extra weeks suggest.
- Retention and defects sit at the end. Money held back until obligations are met, which affects the final draw and the timing of practical completion.
- Cost overruns are the borrower's problem first. Lenders expect the borrower to fund an overrun before the facility increases, if it increases at all.
- The exit is a sale or a refinance into a term facility. Which brings the whole discipline of exit strategies to bear, because the construction facility has a date.
Where a project stalls between completion and its exit, that is the territory of bridging finance — and it is much more expensive than planning for the gap would have been.
Establish experience honestly. A developer with completed projects of comparable scale is a different proposition to a first-timer with a good site, and lenders treat them very differently. Scale matters too: someone stepping from two townhouses to twenty is, from a lender's perspective, doing something new.
Establish the equity position and where it comes from. Cash, an unencumbered site, or borrowed money sitting behind the facility are three different answers, and the third one changes the risk profile substantially.
Establish the approval status, because timing risk in a development sits mostly in approvals and conditions rather than in construction. And establish what the borrower will do if the project runs long, since almost all of them do.
Finally, be clear about which tier this belongs to. Bank appetite for development is narrower and more conditional than for completed assets; a large share of this lending sits with non-bank and private lenders, whose own funding conditions matter — see private lenders.
Australia's private credit market is now roughly $225bn (The Adviser, August 2026) and construction and development lending is a significant part of what it funds. Conditions there are not uniform: some Australian real-estate credit funds gated redemptions across July and August 2026 (trade press, August 2026), and globally the largest semi-liquid private credit funds capped redemptions at their maximum in the first half of 2026 (ABF Journal / The Adviser, August 2026).
For a broker the practical consequence is that a lender's willingness to fund the next stage or extend a term depends partly on its own liquidity. That argues for confirming current appetite rather than relying on a term sheet issued months ago, and for building genuine contingency into the timeline.
Development scenarios arrive inside our commercial finance leads mix rather than as a separate product, and are described further on our development finance page. We do not generate a standalone development lead product.
Enquiries capture property type, approximate value and LVR range with the amount, purpose, timeframe and the borrower's own notes. Sold once, to one broker, never resold, delivered in real time. Pay per lead, no lock-in contracts, no setup fees. The lead is an introduction, not a recommendation.