Short-term private development finance: the money between the milestones

Development projects rarely run short of money in the middle of a neat progress draw. They run short at the edges: the site you have to settle before the bank is ready, the permit stage that drags on, the variation nobody budgeted for, the last two townhouses that haven’t sold when the construction loan falls due. That’s where short-term private development finance earns its keep.

This page is about those gaps — which short-term structure fits each one, what it’s secured against, and how quickly it can be in place. It isn’t a replacement for a full construction facility; it’s what keeps the project moving around one.

Where in a project does short-term private money fit?

Think about a project as a series of milestones, each with its own funding risk.

Project stage	The usual gap	Typical short-term structure
Securing the site	Deposit or settlement due before project funding is approved	Second mortgage or Victorian caveat over another property; first mortgage over the site at settlement
Permits and design	Architects, engineers, consultants and holding costs while approvals are pending	First mortgage over the site, or equity release from another property
During the build	A cost overrun or variation the construction lender won’t fund	Second mortgage or caveat over a separate property
Completion	Construction loan due, some stock still unsold	Residual stock loan — first mortgage over the unsold units
Between projects	Next deposit due before the last project’s sales settle	Short-term bridging finance

The thread running through every row is the same: the money is needed for months, not decades, and there’s an identifiable event that repays it.

What can be used as security?

Either the project itself or something else you own. Lenders look at each differently:

• The development site. Valued as it stands today. Bare land or a site with old improvements usually supports less than a finished home of the same value, because it’s harder to sell quickly.
• Finished, unsold stock. Completed townhouses, units or houses are usually the strongest project security, because they can be sold or rented straight away.
• Another property. Your home, an investment property or business premises. This keeps the development security clean for the main construction lender, which many developers prefer.

Development sites are often held in a company or trust set up for the project. That’s fine — the entity’s documents simply become part of the file, and directors or trustees sign alongside it. Our page on property in a trust or company explains what we ask for so it doesn’t slow you down.

Caveat loans are written for Victorian property. For a site or home anywhere else, a short-term registered first mortgage or second mortgage does the same job, usually just as quickly. Valuation is often the longest step on a development file, so our page on valuations for short-term loans is worth reading early.

Have a site, a deadline and a number in mind? Outline the project for us and we’ll tell you which structure fits.

How do permits affect a short-term development loan?

They shape both the value and the exit. In Victoria, a planning permit is described by Planning Victoria as “a legal document that allows a certain use or development to proceed on a specified parcel of land”, and the guide notes a permit is always subject to a time limit and can expire. A building permit is a separate approval that lets the building work itself go ahead, as vic.gov.au explains.

For a lender, that means:

• a site with a current permit generally has a clearer path to an exit than one still waiting;
• a permit close to expiry adds risk if works haven’t started;
• the loan term should allow for realistic approval times, not optimistic ones.

Illustrative example: holding the last townhouse

An illustration only — round numbers, no real client, no rates.

A small Geelong developer has finished three townhouses. Two have sold and settled; the third is listed but the market is slow. The construction lender wants its remaining balance repaid at completion.

• Security: the unsold townhouse, valued at about $780k with a clean title once the construction loan is paid out.
• Loan: $450k as a short-term first mortgage — an LVR of roughly 58% — which clears the construction lender.
• Time needed: about four to six months to sell at a fair price instead of a fire-sale one.
• Exit: sale of the townhouse. Because it’s new residential premises, the buyer will generally withhold GST at settlement and pay it straight to the ATO — the ATO’s GST at settlement rules set this out — so the developer plans the payout around the net proceeds, not the headline price.

The developer gets time to sell properly. The construction lender is repaid on schedule. Both outcomes beat discounting the last unit.

What makes a development file move quickly?

Speed comes from preparation more than anything else:

1. A clear title on whichever property is offered as security.
2. Current documents — contract of sale for the site, permit, plans, the construction contract or a quantity surveyor’s cost-to-complete if building is underway.
3. Honest numbers on what’s owing, what’s been spent and what’s left to spend.
4. A dated exit, with a back-up if the first one slips.

Same-day funding is possible for $20k to $250k, and loans up to $5m are possible within 24–48 hours on straightforward files. Vacant land and part-finished projects tend to need more valuation work, so build that into your timing. Our guide to what short-term loans cost explains how establishment, valuation and legal fees are structured.

Got a project with a gap? Let’s look at it

Developers are usually juggling a dozen moving parts, so we keep the first step short. The enquiry takes about 60 seconds and involves no credit check when you first enquire. We don’t push your project out to a crowd of lenders — the funds come from us, and a real person here looks at the site, the stage and the timing, and calls you to talk it through.

Please fill the form in carefully: the security property’s address, the state it’s in and the date the money is needed tell us most of what we need to choose the right structure.

Talk to us about your project →