Your development
makes the profit.
Your structure
keeps it.

Yes. Duplex and small townhouse projects (2 to 4 dwellings) are the most accessible entry point to development finance in Australia. Most construction lenders will work with first-time developers on projects at this scale because the risk profile is closer to a standard residential construction loan than a commercial development facility. Expect 60% to 70% LVR on costs from major banks, or 70% to 80% from non-bank specialists like La Trobe Financial or Assetline. The critical thing is the feasibility: a first-time developer with a 25% margin deal is fundable. An experienced developer with an 8% margin deal often is not. Charter Finance's role is to match your project and experience level to the lender whose credit policy genuinely accommodates it.

It depends entirely on the lender and your track record. Major banks typically require qualifying presales covering 100% of the senior debt before construction drawdown for apartment projects above four units. Qualifying means unconditional contracts with 10% deposit, at arm's length, to buyers with independent finance. Non-bank specialist lenders often accept 50% to 70% presales cover, and some stretch to zero presales for experienced developers with strong balance sheets on projects under $10 million GRV. Duplex and small townhouse projects (2 to 4 dwellings) usually require no presales because they're treated closer to residential construction. The presales requirement alone can be the reason one lender says yes and another says no on the same deal.

Yes, realistically on small projects (usually under 8 units or under $8 to $10 million GRV), through non-bank lenders. This is called a "speculative" or "spec" construction facility. You pay for it: rates are typically 2% to 4% higher than a presold facility, establishment fees are higher, and LVR is usually capped at 65% to 70% of costs. But the flexibility is real: you avoid locking in off-the-plan contracts at today's prices for settlement in 18 months, which can cost you significant upside if the market moves. Spec facilities are a deliberate commercial trade-off: you're paying for optionality on the completed product. For first-time developers without an established sales pipeline, or for boutique projects where the finished product commands a premium over off-the-plan, this often makes sense.

Senior debt is the primary construction facility, first-ranking security over the site and the completed project. Typically 60% to 70% loan-to-cost ratio, priced at BBSY plus 2% to 4% depending on lender and project profile. Stretched senior is a single senior-debt facility taken to a higher LVR (up to 80% or 85% of costs) by a specialist lender willing to absorb the additional risk at a higher rate. Mezzanine finance sits behind the senior lender, ranked second. It's more expensive (typically 15% to 20% per annum plus upfront fees, sometimes with profit share), but allows you to reduce the equity you need to contribute. A typical structure might be 65% senior, 15% mezzanine, 20% equity. Mezzanine is expensive money, so whether it makes sense depends entirely on the deal margin. On a 25% margin deal, mezzanine is often worth it. On a 15% margin deal, mezzanine usually eats the profit.

Standard GST on residential sales is 10% of the gross sale price, payable to the ATO. You claim back GST on construction costs (input tax credits) which typically offsets a meaningful portion. The margin scheme is an alternative: you pay GST only on the difference between the sale price and the eligible cost of the land, not on the full sale price. For a typical residential development this can reduce GST from 10% of gross sales to around 6% to 8% of gross sales. Eligibility depends on how and when the land was acquired and the vendor's GST position at the time of your purchase. If the vendor was registered for GST and charged you GST on the land, you generally cannot use the margin scheme. This is one of the first things to clarify with your accountant before contracting the land. Charter Finance's feasibility model assumes margin scheme treatment by default because it's the most common outcome for purpose-built residential development.

Materially. If you retain the units for long-term residential rental rather than sale, there is no GST on the sale (because there is no sale). But the GST input tax credits you claimed during construction must be repaid to the ATO over an adjustment period of up to 10 years. This is called the "increasing adjustment" under Division 129 of the GST Act. Residential rent is an input-taxed supply, meaning you cannot claim GST on it and you must give back the GST on the inputs used to produce it. Practically, holding a development eliminates the GST liability on sale but claws back the construction GST already claimed: the net effect is roughly GST-neutral, not a GST windfall. There's also potential GST on a later sale within five years. This is a decision to make before construction starts, with your accountant, because it changes the GST registration strategy from the beginning.

This is the most common frustration we hear. Major banks assess personal lending on PAYG-equivalent assessable income, not on realised profit or balance sheet. Development distributions, capital gains, and one-off trust distributions often don't count, or get heavily discounted, because the bank's serviceability calculator needs two full years of consistent income to average. A lumpy $800,000 profit year followed by a $120,000 base salary year often comes out as an assessed income of around $460,000 at best, and materially less if the profit was taken as a capital gain distribution. Specific non-bank lenders and select second-tier banks will assess the same income profile much more favourably, sometimes crediting 80% or more of the actual profit. Some will assess on alt-doc using accountant letters and BAS statements rather than tax returns. Charter Finance knows which lenders do what. The difference between the bank who declines you and the lender who approves you is rarely your income itself: it's the lender's assessment methodology.

A construction loan is a residential product: you're building a single home for yourself or as an investor. It progress-pays the builder against fixed-price contract milestones, converts to a standard home loan on completion, and is typically 70% to 90% LVR of the as-complete value. A development facility is a commercial product: it finances the construction of multiple dwellings for sale or rent. It has a defined term (usually 18 to 30 months), interest is capitalised rather than repaid monthly, it's repaid in full from sale proceeds, and it's typically 60% to 70% LVR of the total development cost. Different lenders, different credit processes, different pricing. For a duplex you're splitting and selling, a development facility applies. For a single home you're building to live in, a construction loan applies. For a duplex where you keep one side and sell the other, it depends on the lender and increasingly on how the structure is set up.

Realistically, 8 to 14 weeks for major banks, 4 to 8 weeks for most non-bank specialists. The long pole is almost always the quantity surveyor report, the valuation, and lender credit committee timing. DA approval and fixed-price building contract must both be in place before formal credit submission. If you're working with a lender for the first time, add two to three weeks for relationship setup and onboarding. If you're tight on acquisition timing, that gap matters: many deals are lost to settlement deadlines rather than to credit policy. Charter Finance's approach is to identify the lender and pre-qualify the deal informally before you exchange contracts on the land, so the formal credit process starts with a realistic target settlement date.

Development margin and return on equity measure different things. A 20% development margin (profit on cost) is the standard lender benchmark: most construction lenders require 18% to 20% minimum. But your personal return is return on equity: profit divided by the cash equity you contributed. At 65% senior debt, a 20% margin deal produces roughly 55% to 70% return on equity over the project duration (typically 24 to 30 months). Annualised, that's around 22% to 28% per year. Most sophisticated developers target a minimum 25% annualised return on equity to compensate for the capital being locked up, the execution risk, and the opportunity cost. Below that, the equity is often better deployed elsewhere. The Feasibility Snapshot on this page calculates development margin. The full Excel model on download calculates return on equity and annualised return on equity for you.

Equity without serviceability is inert. A major bank will value your completed stock at market rate and confirm you have $2 million of equity in it, then decline your application to access any of it because the assessable rental income plus your PAYG income doesn't support the proposed debt level under their serviceability calculator. This is increasingly common, especially for developers holding completed stock through an entity structure. Solutions depend on the specifics: non-bank lenders who assess differently (typically more weight on asset position, less on serviceability); alt-doc facilities using BAS and accountant-prepared income statements; equity release from one existing property to serve as deposit or equity contribution on the next project rather than drawing a new personal loan; or commercial equity facilities secured against the development portfolio rather than personal lending against individual assets. Charter Finance regularly structures equity release for developers blocked by serviceability at major banks.

Almost always, yes. Every construction lender in Australia will require personal guarantees from the directors or beneficial owners of the borrowing entity for a development facility. The guarantees are typically joint and several, meaning each guarantor is liable for the full debt. The risk to your family home depends on how your guarantees are structured and whether the lender takes a second mortgage over it as additional security. A well-structured guarantee is unsecured against specific personal assets, meaning the lender's recourse against you as guarantor is a general unsecured debt claim rather than a direct charge over nominated property. This is not a guaranteed outcome, and lender expectations vary. Your solicitor and accountant should review any guarantee document before you sign. The quality of the guarantee structure is one of the reasons the lender selection matters so much: two lenders offering similar rate cards may have materially different guarantee terms.