Property development refinance guide

CPC Lending Solutions specialise in helping property developers secure development finance for commercial and residential projects.

CPC can also help property developers refinance existing loans, either to secure more favourable terms or to fund a new development project.

Depending on your situation, refinancing can provide you with tremendous financial advantage, by putting you in control of your cash flow to grow your development business.

What is refinancing?

At its most basic level, refinancing is when you swap one property development funding package for another. Here’s how it works:

You owe money to Lender A
You take out a new loan from Lender B
You use that loan to repay Lender A
Now you owe money to Lender B instead

When to refinance?

You might be wondering – what’s the point of refinancing if you end up owing the same amount of money, but to a different lender?

There are two reasons refinancing can make sense for property developers:

If the new property development funding package is superior to the old. That might include a lower interest rate, a longer term or more favourable borrowing conditions.
If it allows you to unlock equity. If you have built up considerable equity in your project lenders often let property developers borrow and release some of this equity – but, as part of the process, you have to refinance your existing loan package and get a new valuation on the property.

So there are two scenarios in which you should consider refinancing:

To switch to a better property development finance package
To give you the funding you need to move on to your next development project

The key to winning with property development is winning with finance. Refinancing is one of the tactics property developers use to improve their financial position.

CASE STUDY – How CPC arranged a cash equity release mid-way through a project so our client could secure their next site – Crowd Property Capital

How to refinance your construction loan

Refinancing property development loans is basically the same as securing the original loans in the first place.

That’s because the application process is basically the same:

You have to prove your creditworthiness to the new lender as you did the old
You have to provide the same kind of information to the new lender as you did the old (notwithstanding the minor variation in processes that occur from lender to lender)

Just as when you applied for the original loan, refinancing does involve some time and effort, and there are costs involved.

Thinking about refinancing?

Refinancing has pros and cons. It can deliver incredible benefits for property developers, but it’s not suitable for all developers in all situations.

An experienced development finance broker, like CPC, can talk you through your options, so you can decide if refinancing is right for you.

If you decide you do want to refinance, it’s generally a good idea to do so through a broker, because an expert broker will:

Compare the market on your behalf
Recommend a lender that is suitable for someone with your unique profile
Handle the complex, time-consuming work of managing the loan application

To discuss your development refinance options,get in touch with David Lovato.

Phone: 0434 932 634
Email: [email protected]

Get Finance

“CPC is a professional outfit, Dave displays all the top characteristics of a quality finance broker. Highly effective communication and prompt provision of requested information greatly assists in the loan assessment process benefiting both the client and the lender. His end to end knowledge of the loan application and settlement process is invaluable when navigating through sometimes complex and time sensitive scenarios”

Greg Turner - Trilogy Funds ManagementLender Testimonial

“CPC’s grounding in development management sets them apart from other finance brokers in the construction lending space. Initial assessment of project risks and deep understanding of their developer clients needs allows Solido to quickly assess his deals. Dave stays involved in the projects after initial settlement which is invaluable in assisting both developer and lender on the way through and at loan exit.”

Beau Quarry - Solido Capital Lender Testimonial

“David is highly responsive, always professional, kind and patient. We were impressed with the detail and updates provided by David throughout the lending process. David has shown a high degree of understanding in the structuring and brainstorming of an optimal funding solution, finding a suitable solution for both the capital provider, and the client”

Lender TestimonialSouth Yarra VIC

Frequently asked questions

Why do developers refinance?

Developers refinance when they can get a better deal, need to extend the term of their loan or reach a milestone in their development. For example, when the development stage is complete, developers may refinance to a residual stock loan to get a lower interest rate.

What does it mean to refinance a building?

Refinancing a building means swapping out the existing finance for new finance. This may be to extend the loan, to get a lower interest rate, to get better terms or because the building is completed.

Is a development loan the same as a mortgage?

No. A development loan is not the same as a mortgage.

Development loans are short-term loans that last as long as it takes to develop a project.

Mortgages are long-term loans designed for assets you want to keep for years.

Can I refinance a commercial project?

A commercial project can be refinanced at various stages of the project.

As the project nears completion, there is less risk and it may be possible to get better terms by refinancing.

Refinancing is also used if the developer needs additional funds.

When should I refinance?

You should consider refinancing when you reach certain milestones in your development, for example if the development is complete but you haven’t sold or rented out all the units yet.

You could also refinance if you need additional funds or if interest rates have fallen since you secured your funding.

Legal & Compliance

Crowd Property Capital Pty Ltd (CPC)

A registered company under the Corporations Act 2001, ACN 600 539 544

An accredited member of the Finance Brokers Association of Australia (FBAA) Member No M-352808

A licensed Corporation under the Property, Stock and Business Act 2002, Corporation License No. 10065109.

A member of the Real Estate Institute of NSW (REINSW)

David Lovato (Sole Director) holds a Certificate IV in Finance and Mortgage Broking and Property Services (Real Estate Agents License No 201 604 57 )