Townhouse Development Finance

Townhouse development finance is a specialist facility used to fund the construction of multiple townhouses on a single development site. It is assessed as development finance, based on project feasibility, gross realisation value (GRV), pre-sales, and developer experience, rather than as a standard residential construction loan. Funds draw in stages aligned to construction milestones, and the loan is repaid from sales proceeds or refinance at completion.

The borrowable amount is based on the project's gross realisation value (GRV) and total development cost (TDC). Development lenders typically fund up to 65 to 70% of GRV, with the remaining equity contributed by the developer. Settled Funding Group arranges townhouse development finance from $200,000 to $15,000,000. Submit your feasibility and Joseph Farhat will provide an indicative assessment for your project.

Pre-sales requirements vary by lender. Bank lenders typically require pre-sales covering a significant portion of the loan amount. Non-bank development lenders often have lower thresholds or no pre-sales requirement for smaller projects with strong feasibility. SFG's panel includes lenders across this spectrum. Joseph Farhat identifies the right lender based on your pre-sales position and project profile.

Development lenders assess townhouse projects on a cost-to-complete and GRV basis rather than a simple LVR. Most lenders will fund up to 65% to 70% of GRV on a townhouse development. For strong projects with good pre-sales and an experienced developer, some non-bank lenders will consider higher ratios. SFG reviews the feasibility and advises on what is achievable across the panel.

Yes. First-time developers have access to non-bank development lenders through SFG's panel, particularly where the project has a DA-approved site, a fixed-price contract with an experienced builder, strong pre-sales relative to the loan amount, and sufficient equity in the deal. Banks are more restrictive on developer track record. Joseph Farhat will give a direct assessment of what is achievable given your experience level.

Typically: a development feasibility study, council DA approval, fixed-price building contract with a licensed builder, presale contracts (if applicable), a QS report or construction cost breakdown, evidence of site ownership or contract, developer financials or a statement of assets and liabilities, and borrower entity documents. SFG provides a tailored document checklist for your submission and lender.

Funds are drawn progressively as the build reaches agreed milestones: typically site works, base/slab, frame, lockup, fit-out, and practical completion. Most development lenders require an independent progress claim inspection before approving each drawdown. The lender's quantity surveyor or inspection agent certifies the completed work. SFG coordinates the drawdown process with the lender throughout the build.

As each townhouse settles with a buyer, the net sale proceeds are applied to reduce the development facility under a partial discharge arrangement. The lender specifies the minimum amount that must be repaid per lot sold, with any balance released to the developer after reaching agreed thresholds. If holding rather than selling, the development loan can be refinanced to a long-term investment facility at practical completion. SFG can arrange exit finance alongside the development facility.