Financial preparation is just as important as due diligence for property developers

If you are thinking of developing property then you will need to have a good understanding of construction finance.

As property developers, most of our clients like to highly gear their lending. That means, using as much funding from others to pay the builder rather than use their own cash reserves.

However, you may like to use a line of credit (LOC) set up against another property and/or cash on hand to fund your development. It will depend on your own situation and strategy.

You will require some cash to put into the deal of course for deposits on the land purchase and on the construction loan.  The loan to value ratio (LVR) will vary from lender to lender from just 50% up to 95% with lender’s mortgage insurance (LMI).