Land Subdivision Finance

Land subdivision finance is a specialist facility used to fund the acquisition and development of land into separate titled lots. The loan covers the purchase of the parent lot or site, the cost of civil works and infrastructure needed to create the new lots, council contributions, and holding costs during the approval and construction period. The loan is repaid from the proceeds of selling the subdivided lots or from refinance to a construction or development facility.

Yes. Pre-DA site acquisition finance is available through non-bank lenders on SFG's panel, and for unique scenarios we can introduce you to private finance options. These facilities fund the purchase of a site while the development application is being prepared and lodged. The loan term needs to be long enough to cover the DA process, typically 6 to 18 months depending on council. The risk premium is higher for pre-DA loans than for DA-approved sites, and LVRs are typically lower.

Land subdivision finance can cover: the acquisition of the site, civil works costs including roads, drainage, kerbing, utility connections, and landscaping, council infrastructure contributions and headworks charges, surveying and plan of subdivision costs, holding costs and interest during the approval and construction period, and professional fees for planning and project management. SFG structures the facility to cover the full project budget and manages drawdowns against each cost category.

LVR for land subdivision finance is typically assessed on the site's current market value and, where works are funded, on the end value of the subdivided lots. Lenders generally fund up to 65% of the as-is site value for pre-DA finance, rising to 65 to 70% of GRV for DA-approved subdivision projects. Settled Funding Group compares LVRs across the panel and identifies the lender with the most competitive position for your site and project stage.

Loan terms are set to match the subdivision timeline. A simple residential backyard subdivision might be funded for 6 to 12 months. A larger site requiring civil works and council approval could run 12 to 24 months or longer. The key is that the term is long enough to complete the subdivision and execute the exit, whether that is selling the lots or commencing a construction project on the titled land.

Land subdivision finance creates the lots: it funds the process of taking a parent title and subdividing it into separate, independently titled parcels. A development loan then funds the construction of dwellings or buildings on those lots. The two facilities can be used sequentially: subdivision finance to create the lots, then development finance to build on them. Some lenders will fund both stages under a combined facility. SFG advises on the most efficient structure for your project.

Yes. Civil works financing is a core component of land subdivision finance. Civil works, including roads, drainage, utilities, retaining walls, and council-required infrastructure, are typically the largest cost in a residential subdivision. Most subdivision lenders fund civil works as a component of the overall facility, with drawdowns released as works are completed and certified by an independent engineer or quantity surveyor. SFG structures the civil works funding with the lender from the outset.

As each lot settles, the net sale proceeds are applied to reduce the subdivision facility. Lenders set a minimum repayment per lot, with any surplus released to the developer. The key structure negotiated upfront is the partial discharge amount: how much of the loan must be repaid when each lot title transfers. SFG negotiates partial discharge provisions that allow the developer to access equity as lots sell rather than having all proceeds applied to the loan until it is fully repaid.