Construction is complete. The CCC is issued. Your units look fantastic. You've got a few sales under contract.
But you don't have all of them sold yet.
Your bank is checking in weekly. "When will the remaining units sell? Your facility expires in four months. We need full repayment."
The market's softer than when you started. You're getting interest, but buyers are taking longer to commit. You've got three solid offers at 10% below your target price—do you take them, or wait for better pricing?
Meanwhile:
You're 80% of the way to success, but the final 20% feels impossibly hard.
This is the development selldown crunch—and it's one of the most stressful phases of property development. Construction risks are behind you. The product is proven. But timing and market conditions are creating pressure you didn't anticipate.
Development bridge loans solve this specific problem: buying you time and breathing room to sell your remaining stock strategically rather than desperately.
Let's break down how they work, when they make sense, and how to manage the final sprint to complete selldown.
Understanding why this phase is difficult helps you plan for it better next time—and recognize when you need help this time.
Most bank development facilities are structured as:
The problem:
If sales are slower than projected, you run out of time before you run out of stock. Banks have strict timelines and aren't set up for extended selldown periods.
Real example:
Markets change during developments. You start when conditions are strong, finish when they've softened.
Common timing issues:
Impact:
Sales that you projected at 6-8 weeks per unit are taking 12-16 weeks. The math still works, but the timeline doesn't fit your facility.
Not all presales convert to settlements.
Why presales fail:
Impact:
You thought you had 6 presales (75% sold), but 2 fell over. Now you're at 4 sales (50%) with facility expiry approaching.
Even with some units sold, you're carrying significant costs on remaining stock:
Monthly holding costs per unit:
For 3 unsold units: $9,000-18,000 per month
After 6 months of slower-than-expected sales, you've burned through $54,000-108,000 in holding costs. This erodes your profit margin and increases pressure to accept lower offers.
When buyers sense urgency, they negotiate harder.
Signals that expose pressure:
Result:
You get offers at 5-15% below your target pricing because buyers know you're motivated. The difference between selling at $680k vs. $750k across 3 units is $210k—your entire profit margin might disappear.
Your bank relationship deteriorates during extended selldowns:
Bank's perspective:
Impact on you:
Even if you eventually sell everything successfully, the relationship damage affects your ability to fund future projects.
A development bridge loan buys you time to execute a strategic selldown rather than a distressed selldown.
Primary function:
Takes out (repays) your existing bank facility, removing their time pressure and giving you 12-24 months to sell remaining stock strategically.
Structure:
BEFORE: Bank facility
- 8 units total
- 5 units sold
- 3 units unsold
- Bank debt: $1.2M on 3 units
- Bank: "Facility expires in 2 months, full repayment required"
AFTER: Luminate bridge loan
- Luminate pays out bank facility ($1.2M)
- New facility: 12-month term, interest-only
- Pressure removed
- Time to sell 3 units strategically
- Repay Luminate from sale proceeds1. Time to Achieve Target Pricing Rather than accepting $650k offers on $750k units, you can wait for buyers willing to pay fair value. The cost of the bridge loan might be $80k for 12 months, but getting an extra $100k per unit ($300k total) makes it worthwhile.
2. Removes Bank Pressure No more weekly calls. No threats. No forced sale. You control the selldown strategy.
3. Preserves Bank Relationship You repay the bank in full. They're happy (you met your obligations). This preserves your ability to borrow from them for future projects.
4. Restores Negotiating Power When you're not desperate, you negotiate from strength. Buyers can't lowball you because they sense urgency.
5. Allows Seasonal Timing If it's December and the market is dead, you can wait until February/March when buyers return. If interest rates are high, you can wait for the expected cuts.
6. Enables Strategic Improvements With time pressure removed, you might stage the remaining units better, upgrade finishes, or implement marketing strategies that take time but increase value.
We structure these loans based on your specific situation.
What it is:
Luminate pays out your entire bank facility and takes first mortgage over all remaining stock.
Best for:
Example:
Advantages:
What it is:
Bank retains mortgage over sold/settled units, Luminate provides second mortgage or additional funding for remaining stock.
Best for:
Example:
Advantages:
What it is:
Luminate buys the remaining units at a wholesale price, you exit immediately.
Best for:
Example:
Advantages:
Disadvantages:
What it is:
Luminate provides funding across multiple properties (the development plus other assets you own) to create breathing room.
Best for:
Example:
Name: Rachel (experienced developer, 3 previous successful projects)
Reputation: Strong—quality builds, good relationships
Financial position: Net worth $2.8M across property portfolio
Location: Tauranga (growing Bay of Plenty city)
Project: 7 x 3-bedroom townhouses
Construction: Completed on time and on budget
Quality: Excellent—architect-designed, high-spec finishes
Target market: First home buyers and investors
Original projected price: $720k-750k per unit
January 2023: Construction commenced
June 2024: Construction completed (18 months, on schedule)
July 2024: CCC issued, marketing began
August 2024: First unit sold at $735k (above target!)
September 2024: Second unit sold at $728k
October 2024: Third unit sold at $725k
Then... the market changed
November 2024-January 2025: No sales (summer slowdown + economic uncertainty)
February 2025: Two offers received at $660k each (9% below target) - Rachel declined
March 2025: One offer at $680k - Rachel countered at $715k - no deal
April 2025: Bank facility expires in 2 months (June 2025)
Remaining stock: 4 unsold units
Outstanding bank debt: $1.44M ($360k per unit average)
Bank facility: Expires June 30, 2025
Bank position: "We've extended once already. No more extensions. Full repayment required June 30."
Rachel's dilemma:
Option 1: Accept current offers ($660-680k range)
Option 2: Hope sales accelerate in next 60 days
Option 3: Find bridge funding
Rachel's calculation:
Bridge loan scenario:
If Rachel can sell at target pricing ($720k average over 12 months):
Wait—that's LESS than the distressed sale option ($1.146M vs $1.068M)?
Yes, but only if she sells at $720k. Rachel believed she could achieve $740k+ with more time as the market stabilized.
At $740k average:
At $760k average (closer to original target):
The decision: Rachel needed confidence she could achieve $740k+ with more time. She consulded her agent.
"Look, the current market is just hesitant. The election uncertainty passed, but people are still cautious. Interest rates are likely to drop later this year. These townhouses are objectively great value at $740k—comparable properties are $780-800k. We're getting inquiries, just not commitments yet. Give me 8-10 months and I'm confident we'll sell all four at $740k+. We might even get $760k on the best two."
April 2025: Rachel applied for development bridge loan
Assessment:
Approval: 5 days
Structure:
May 2025: Facility settled, bank repaid in full
June 2025: Rachel renovated staging, upgraded marketing photos
July 2025: First unit sold at $748k (above target!)
August 2025: Second unit sold at $755k
October 2025: Third unit sold at $742k
December 2025: Final unit sold at $738k
Total sales: $2,983,000 (average $745,750 per unit)
Revenue:
Costs:
Net profit on 4 units: $1,204,120
Compared to distressed sale scenario ($1,146,000):
Rachel's reflection:
"The bridge loan felt expensive when I was signing the papers—$28k upfront hurt. But watching those sales come in at $740k+ instead of $660k made it completely worthwhile. Unit 2 at $755k exceeded even my optimistic projections. More importantly, I kept my bank relationship intact—they've already indicated they'll fund my next project because I repaid them in full as promised. That relationship is worth more than the bridge loan cost."
Your product is sound but timing is off
The math supports it
Your bank facility is expiring
You're close to complete selldown
You have sufficient equity buffer
Your product has fundamental issues
The market is deteriorating rapidly
You're deeply underwater
You have no buyer interest
You can't service the bridge loan
| LVR Range | Typical Rate | Risk Profile |
|---|---|---|
| Under 50% | 9.5-11% p.a. | Lower risk - strong equity buffer, quality stock |
| 50-60% | 11-12.5% p.a. | Moderate risk - reasonable equity, proven sales |
| 60-70% | 12.5-14% p.a. | Higher risk - tighter equity, market challenges |
| Over 70% | 14-16% p.a. or decline | Very high risk - limited equity buffer |
Factors affecting your rate:
| Fee Type | Typical Amount | When Paid | Notes |
|---|---|---|---|
| Establishment fee | 1.5-3% of facility | Upfront | One-time setup cost |
| Valuation | $2,000-5,000 | Upfront | Depends on number of units |
| Legal fees (Luminate) | $2,500-6,000 | Upfront | Documentation |
| Discharge fees | $500-1,500 per title | As units sell | Progressive release of titles |
| Extension fee (if needed) | 1-2% of remaining balance | If extended | If original term insufficient |
Scenario: 5 units remaining, $1.8M facility, 12-month term, 11.5% rate
| Cost Component | Amount | Calculation |
|---|---|---|
| Interest (capitalised) | $207,000 | $1.8M × 11.5% × 1 year |
| Establishment fee (2%) | $36,000 | $1.8M × 2% |
| Valuation | $3,500 | 5 units assessed |
| Legal (Luminate) | $4,000 | Documentation |
| Discharge fees | $5,000 | 5 units × $1,000 each |
| Total cost | $255,500 | 14.2% of facility |
Per unit (if 5 units): $51,100 average cost per unit
Question: How much higher do sales need to be to justify the bridge loan?
Using above example ($51,100 cost per unit):
If you're getting offers at $650k but believe you can achieve $700k with time:
You need to achieve just $1,100 more per unit than current offers to break even. Anything above that is pure gain.
Reality check: If you can't get at least $675k+ per unit with extra time, the bridge loan economics are marginal. You need meaningful upside to justify the cost.
Property information:
Sales history:
Financial information:
Market evidence:
Exit strategy:
| Stage | Timeline | Details |
|---|---|---|
| Initial inquiry | Day 1 | Outline situation, we assess feasibility |
| Property review | Days 1-3 | We inspect properties and review documentation |
| Valuation | Days 3-7 | Independent valuation of remaining stock |
| Credit assessment | Days 5-10 | Review financial position and market |
| Approval | Days 10-12 | Formal loan offer issued |
| Documentation | Days 12-18 | Loan agreements prepared |
| Bank payout coordination | Days 18-21 | Coordinate with your bank for payout |
| Settlement | Day 21-25 | Funds released, bank facility repaid |
Total timeline: 3-4 weeks from first contact to bank payout
For urgent situations (facility expiring in weeks): We can compress this to 10-14 days if you have documentation ready
Having these ready speeds up the process significantly.
Once you have bridge funding, execute these strategies for optimal results:
What to do:
Why it works:
Properties that sit on market become "stale" in buyers' minds. Fresh marketing creates renewed interest.
Cost: $5,000-15,000
Potential value: Can lift sale prices 2-5%
Approach:
Example: Instead of listing at $750k firm, list at "Offers over $720k" or "Buyers in the $730k+ range."
This generates more inquiry, creates competition, and often achieves $740-760k through competitive offers.
Strategy:
Example: If you have 4 units remaining:
Why it works:
Buyers fear missing out when they see units selling. Scarcity maintains value.
Diversify marketing:
Different segments have different triggers. Cast a wider net.
Not price reductions—value adds:
Why it works:
Preserves your headline price (important for comps) while making deal attractive. Costs you less than equivalent price reduction.
Best selling periods in NZ:
Worst periods:
Strategy:
If you get bridge funding in November, hold through December/January and launch fresh campaign in February. The 2-3 month wait costs you interest but positions you for strong selling season.
We expect you to:
We provide:
As each unit sells, we release that title and you repay portion of loan.
Example:
This progressively reduces your interest costs and our risk.
If you need more time:
Contact us 60-90 days before expiry (not 2 weeks before)
We'll assess:
Extension options:
We're more likely to extend if:
Your construction facility was structured for the build phase—interest capitalised, progressive drawdowns as construction advanced, and a selldown buffer. But banks have firm time limits.
A development bridge loan is specifically for the selldown phase—it buys you time when the bank won't extend further. It's shorter term (12-24 months vs. banks' 24-36+ months), focused purely on managing the sales period.
Yes. In fact, that's a common scenario. The bank has extended once or twice but won't extend again. We step in to provide the additional time you need.
The fact that the bank extended previously often indicates they believe in the project—they just can't extend indefinitely due to their own policies.
We'll assess this during our due diligence. If independent valuation and market analysis show you're genuinely overpriced, we'll have a honest conversation about realistic pricing.
Bridge loans can't solve fundamental pricing problems. If you need to drop from $750k to $650k, the bridge loan might still make sense—but you need to be realistic about achievable prices.
We might approve with condition that you adjust pricing to market within first 3 months.
No. You retain control of marketing and sales. You choose the agent, set the strategy, accept offers.
We're passive lenders—we hold the mortgage and provide funding, but you run the selldown.
However, we may require regular updates and reserve right to step in if you're clearly not actively marketing or making reasonable decisions.
Generally yes, if:
Common improvements we support:
Major structural changes would need specific approval.
This is a risk for both of us. If values fall significantly:
Scenario 1: You're still above water
Scenario 2: You're underwater
This risk is exactly why we require reasonable LVRs (typically under 65-70%). The equity buffer protects both parties from moderate market declines.
Yes, and this is actually a good strategy in some situations.
Advantages of renting while selling:
Disadvantages:
Best approach:
Short-term tenancies (6-month terms with 90-day break clause for sale) give you flexibility while generating income.
If you've sold most units but one or two remain, we're usually flexible about extensions because:
Last remaining units often sell at premium prices because buyers know you're down to final stock.
You can switch agents if:
We'd want to understand your reasoning, but we support changes that improve selldown prospects.
That said, switching agents mid-campaign can sometimes reset momentum, so consider timing carefully.
For body corporate titles:
For cross-lease or complex title structures:
Best to disclose any title complications early in application process.
Before committing to a bridge loan, consider whether these alternatives might work:
Try one more time with your bank:
Sometimes banks will extend if you:
Advantages: Lower cost than bridge loan
Disadvantages: Bank may still decline, uses up time
When to try: If you have even small chance of bank extension, it's worth attempting first
Approach investors who buy multiple units:
Advantages:
Disadvantages:
When it works: If you're truly exhausted, need to move to next project, or market deteriorating rapidly
Structure:
Example:
Advantages:
Disadvantages:
Bring in equity partner:
Advantages:
Disadvantages:
When it works: If you have partner relationships and prefer equity to debt
Understanding the emotional side helps you make better decisions.
The feeling:
"I've worked so hard on this project. I can't accept these low offers. I deserve better prices."
The reality:
What you "deserve" doesn't matter. Only market prices matter. Past effort doesn't change current market value.
Better thinking:
"Given where I am TODAY, what's the smartest path forward?" Ignore sunk costs, focus on options from this point.
The feeling:
"My target was $750k per unit. $680k offers feel like failure."
The reality:
Your target was based on conditions 18 months ago. Conditions changed. $680k today might be equivalent to $750k back then in relative terms.
Better thinking:
"What can I realistically achieve in current market? Is bridge loan cost-effective to reach realistic pricing, or should I adjust expectations?"
Hope (healthy):
"Market indicators suggest improvement in 6-8 months. Recent sales support $720k pricing. Bridge loan gives me time to capture that."
Denial (dangerous):
"The market HAS to improve. My units are great. Eventually someone will pay $750k. I just need more time."
Key difference:
Hope is evidence-based. Denial ignores evidence.
Better thinking:
Honestly assess evidence. Talk to multiple agents. Look at actual sales, not just listings. Make evidence-based decisions, not emotion-based ones.
What happens:
Bridge loans break this spiral by removing pressure:
The paradox: Sometimes paying more (bridge loan) gets you more (better sale prices) because psychology matters in negotiation.
You're so close to the finish line. You've successfully completed construction, managed the build, delivered quality units, and made multiple sales.
Don't let timing pressure force you into selling at distressed prices and erasing your profit margin.
A development bridge loan makes sense when:
Get expert assessment of your development selldown situation and clear direction forward.
Contact Luminate Financial Group:
📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
🌐 Visit luminate.co.nz
Ready to complete your development selldown without pressure sales? Understanding development bridge loan options is the first step toward achieving target pricing and protecting your profit margins. Contact Luminate Financial Group to discuss how our development bridge financing expertise can give you the time and breathing room needed to sell your remaining units strategically, not desperately.