Introduction
In Episode 202 of the Property Mastermind Podcast, Hilary Saxton and Bob Andersen revisit the most important points from their recent live lunchtime event on property development finance.
This episode is a must-listen if you’re unclear about how development finance works, who lends the money, and how to structure deals for approval.
From the two core funding stages to no-doc loans, capitalised interest, and lender types, Bob shares real experience and practical insight that new and seasoned developers need to understand.
Episode Highlights
[00:00] Intro and recap of the live finance session
[01:20] Why limited-time replays drive action and protect valuable IP
[02:45] Plans to re-record the session as a more visual YouTube version
[03:54] Book giveaway: Property Millionaires Exposed goes to Genita Abraha
[04:57] The two stages of property development finance: acquisition and construction
[07:15] Three ways to finance a development depending on cash and approvals
[09:50] Why residential banks don’t typically finance developments
[12:00] Understanding non-bank lenders and when to use them
[14:02] Why some developers use investment loans as a workaround for site purchases
[16:03] How second loans replace first mortgages at construction phase
[17:19] When private individuals provide second mortgages
[18:57] Types of lenders: banks, non-banks, and private equity
[20:00] APRA vs ASIC vs unregulated lenders
[21:29] No-doc loans: what they are, who uses them, and how they work
[24:58] Capitalised interest and why it helps manage cash flow
[26:39] How non-banks assess the deal more than the person
[27:44] Understanding line fees and how they affect your costs
[29:44] Real-world finance win: 4-hour loan approval on an apartment project
[31:45] Real-world finance challenge: when a broker’s misstep nearly lost a deal
[34:43] Why your feasibility must include what valuers and lenders need
[36:28] Developers selling to developers: why transparency matters
[37:50] Handover success for mentoring student David—project complete and listed
Episode Transcript in Brief
Introduction
Hilary:
This week we’re doing a finance recap from the live lunchtime session we ran recently. So many people got value from that session, and we had quite a few messages afterwards asking if they could watch the replay.
Bob:
We kept the replay available for about 48 hours, which was deliberate. There’s so much great content in these free sessions, but we also want to encourage action. When you know there’s a time limit, you’re more likely to watch it and make use of it.
Hilary:
Also, people who’ve invested in our courses or bundles have access to everything long-term. The free stuff is a taste—it gets you started, but it’s not the full picture.
Bob:
We are planning to record a more visual version and put it on YouTube so people can watch the concepts with graphics and diagrams.
Two Key Stages of Development Finance
Bob:
Let’s get into the finance side. Development finance happens in two stages:
Acquisition finance – for buying the land.
Construction finance – for funding the build.
You can fund these stages in different ways depending on your equity and whether you have development approval.
Hilary:
So the funding structure might change once the DA is in place?
Bob:
Exactly. Some developers buy sites using a regular investment loan, then refinance with a commercial loan once they have a permit and plans.
Why Residential Banks Don’t Like Development
Bob:
Residential banks prefer low-risk, long-term loans—like home loans or standard investment properties. They’re not geared for development, especially if the project has multiple dwellings or involves subdivisions.
Hilary:
So that’s why many developers go to non-bank lenders?
Bob:
Yes. Non-banks are more flexible. They assess the deal more than the borrower. And if needed, you can also bring in a second mortgage from a private investor.
Understanding Lender Types
Bob:
There are three main categories of lenders:
Banks (regulated by APRA)
Non-bank lenders (regulated by ASIC)
Private lenders (not regulated)
Each has pros and cons depending on the project size, timing, and risk appetite.
Hilary:
And within that, you’ve got options like low-doc and no-doc loans?
Bob:
Correct. Low-doc means you provide basic documents. No-doc means the lender relies on the strength of the deal—things like your project feasibility and presales—rather than your income or credit.
Capitalised Interest
Bob:
With development loans, you usually have capitalised interest. That means the interest isn’t paid monthly—it’s added to the loan and repaid at the end when you sell or refinance.
Hilary:
That helps with cash flow, especially during construction.
Bob:
Exactly. It keeps your cash free to manage other parts of the project.
Feasibility and Valuation
Bob:
One mistake developers make is preparing a feasibility that doesn’t align with what valuers or lenders want to see. You can’t just make it up. It needs to be professional and accurate.
Hilary:
There’s a structure to what a feasibility should include. And if you miss key pieces—like end values, finance costs, or contingency—it can derail your funding.
Real-World Examples
Bob:
We had one developer get a loan approved within 4 hours. It was a well-prepared deal, feasibility was solid, and all the right boxes were ticked.
Hilary:
And we’ve seen the opposite—like when a broker submitted the wrong entity details to a lender, and the whole deal nearly fell through.
Bob:
Exactly. Your team matters. Use professionals who understand development.
Final Takeaways
Hilary:
Whether you’re starting out or scaling up, development finance is something you need to understand—not just outsource.
Bob:
The more you know, the more confident and in control you’ll be. Learn the stages, know your options, and work with people who know what they’re doing.
Hilary:
That’s a wrap for Episode 202. If you want more support or education, head to propertymastermind.com.au and explore our courses, mentoring, and free tools.
Bob:
We’ll see you next week.