Property Development Funding: Beyond Bank Servicing Criteria

You've got the site. You've got the plans. You've got the builder. You've run the numbers twenty times—the project stacks up beautifully. Strong margin, realistic timeline, solid exit strategy.

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Table of Contents

• Why Banks Decline Good Development Projects
• How Luminate Assesses Development Projects Differently
• Development Funding Structures We Offer
• Real-World Case Study: The Declined Townhouse Development
• When Development Funding Makes Sense
• Costs and Terms for Development Funding
• How to Structure Your Development Funding Application
• How to Apply for Development Funding
• Maximizing Your Development Funding Success
• Frequently Asked Questions

Key Takeaways

• Banks decline viable development projects not due to project weakness, but because of rigid servicing criteria, presale requirements (60-70%), track record demands (2+ projects), and automated calculators that can't assess project-specific cashflow—just personal income ratios
• Luminate assesses developments on project fundamentals rather than policy boxes: realistic feasibility studies, experienced development teams, strong exit strategies with multiple backup options, and meaningful developer equity (25-40% of total development cost)
• Development funding structures include full development funding (70-75% LVR), mezzanine/second mortgage funding to fill equity gaps alongside bank senior debt, mid-construction top-up facilities for cost overruns, and mixed first/second mortgages across portfolio properties
• Interest rates range from 9-15% annually depending on risk profile—lower risk projects (experienced developer, strong presales, simple construction) attract 9-11% rates while higher risk scenarios (first-time developer, no presales, complex design) face 13-15% rates plus establishment fees of 2-4%
• Real-world example: James's 6-unit townhouse development was bank-declined despite strong fundamentals—Luminate provided $2.16M at 11.5% interest, project completed on time, delivered $657k profit, and the "expensive" finance cost of $389k became irrelevant against the total return
• Professional quantity surveyor reports ($3k-8k investment) significantly strengthen applications over builder quotes alone, while conservative contingencies (10-15% for standard projects) and early builder engagement demonstrate thorough planning that improves approval odds
• Application timeline spans 4-5 weeks from initial inquiry to first drawdown (compressible to 2-3 weeks for urgent situations), requiring comprehensive documentation including architectural plans, engineering reports, QS estimates, market analysis, team credentials, and clear multiple-exit strategies

Then you sit down with the bank.

"The project looks good, but it doesn't meet our servicing criteria."
"Your presales aren't at 70% yet."
"The GDV-to-cost ratio is outside our parameters."
"Your personal income doesn't support the debt loading in our calculator."
"We need two years of development track record."

The automated systems say no. The credit policy says no. It doesn't matter that the project fundamentals are sound—you don't fit the box.

This is the reality of bank development lending in New Zealand. Banks have tightened serviceability criteria, increased presale requirements, and rely heavily on automated assessment tools. Projects that would have been funded five years ago now fall outside their appetite.

But "outside bank criteria" doesn't mean "unfundable."

It means you need development finance structured to the project's merits, not just a calculator's output.

This is where specialist development funding comes in. Let's break down how it works, when it makes sense, and how to structure development finance that banks won't touch.

Why Banks Decline Good Development Projects

Understanding why banks say no helps you position projects for alternative funding.

Reason 1: Servicing Calculator Constraints

Banks use automated servicing calculators that assess your personal income against the proposed debt.

The problem:
Development loans are often large relative to personal income. A $2M development loan might require $200k+ annual income to meet servicing ratios—even though the project itself generates the repayment capacity, not your salary.

Real example:

• Developer income: $120k annually
• Development loan needed: $1.8M
• Bank calculator: Declines (debt-to-income ratio exceeds limits)
• Project reality: Will generate $400k profit in 18 months

The calculator can't assess project cashflow—only personal income.

Reason 2: Presale Requirements

Many banks now require 60-70% presales before releasing construction funding.

The problem:
Preselling 70% of a development before construction starts is:

• Extremely difficult in many markets
• Limits pricing flexibility (you're locked into early prices)
• Creates chicken-and-egg problem (buyers want to see construction progress)
• May not be necessary for the project's risk profile

Real example:

• 8-unit townhouse development
• Strong location, experienced builder, realistic pricing
• Developer has 2 presales (25%)
• Bank requirement: 5-6 presales (60-70%)
• Timeline delay: 6-12 months trying to presell vs. starting construction

The presale requirement may have nothing to do with actual project risk.

Reason 3: Track Record Requirements

Banks prefer developers with established track records—often 2+ completed projects.

The problem:
Every developer starts somewhere. First or second projects might be excellent, but banks de-risk by requiring experience that can only come from... doing developments.

Real example:

• Developer completed 1 successful duplex project
• New project: 6-unit townhouse development
• Same builder, similar market, conservative budgets
• Bank: "You need more track record"
• Reality: Track record from project #1 should be sufficient

Reason 4: LVR Constraints

Banks typically lend 60-70% of Total Development Cost (TDC) or 70-75% of Gross Development Value (GDV).

The problem:
These LVR limits require substantial developer equity. A $3M development at 65% LVR needs $1.05M cash equity—capital many developers don't have.

Real example:

• Total development cost: $2.8M
• Bank LVR: 65%
• Bank funding: $1.82M
• Developer equity required: $980k
• Developer equity available: $500k (land + cash)

The project is viable but the developer can't bridge the equity gap.

Reason 5: Construction Timeline Concerns

Banks prefer shorter construction timelines—typically under 18 months.

The problem:
Larger, more complex developments naturally take longer. A 24-month timeline doesn't indicate weakness—it's realistic project planning.

Real example:

• 12-unit apartment development
• Realistic construction period: 22 months
• Bank preference: 18 months maximum
• Result: Decline despite strong fundamentals

Reason 6: Geographic or Property Type Restrictions

Banks have "red zones"—areas or property types they won't fund regardless of project quality.

The problem:
These restrictions are policy-driven, not project-specific. Your development in a "restricted" area might be excellent, but policy is policy.

Examples:

• Regional centres (outside main cities)
• Apartment developments under certain sizes
• Areas with recent market softness
• Specific construction types (e.g., terraced housing in some markets)

How Luminate Assesses Development Projects Differently

We don't ignore risk—we just assess it differently.

What We Focus On

Our Assessment Criteria

1. Project Fundamentals

• Is the project feasible?
• Are budgets realistic?
• Is the timeline achievable?
• Does market demand exist?

2. Development Team Quality

• Experienced builder with good track record
• Realistic project management
• Competent consultants (architect, engineer, surveyor)
• Developer understanding of risks and mitigation

3. Exit Strategy Strength

• Clear path to repayment (sales or refinance)
• Realistic pricing based on comparable evidence
• Multiple exit options if primary strategy delays
• Timeline buffers built in

4. Security Position

• Land value
• Development potential
• First mortgage position (or second mortgage with good equity buffer)
• Overall LVR including contingencies

5. Developer Skin in the Game

• Meaningful equity contribution (cash or land)
• Alignment of interests
• Demonstrates commitment

We can fund projects banks decline because we're assessing the project, not just running numbers through a calculator.

Development Funding Structures We Offer

We don't have one-size-fits-all development products. We structure funding to fit your situation.

Structure 1: Full Development Funding

What it is:
Luminate provides all construction funding from start to finish.

Best for:

• Developers who don't have bank relationships
• Projects banks won't touch
• Fast-track timelines
• Situations requiring certainty

Typical terms:

• LVR: Up to 70-75% of TDC or GDV (whichever is lower)
• Term: Construction period + 6-12 months selldown
• Interest: Capitalised during construction, then interest-only or P&I
• Security: First mortgage over development site

Example scenario:

• 6-unit townhouse development
• Total development cost: $2.4M
• GDV (end value): $3.6M
• Luminate funding: $1.8M (75% of TDC)
• Developer equity: $600k (land value + cash)
• Term: 18 months construction + 12 months selldown

Structure 2: Mezzanine (Mezz) Development Funding

What it is:
Luminate provides additional funding alongside a bank's senior debt, filling the equity gap.

How it works:

Bank provides: 60% of TDC (first mortgage)

Luminate provides: 20% of TDC (second mortgage/mezz)
Developer equity:  20% of TDC
Total:            100% funding

Best for:

• Developers with bank relationships but insufficient equity
• Larger projects where banks will participate but not at full amount needed
• Situations where keeping bank relationship has long-term value

Typical terms:

• Sits behind bank's first mortgage as second mortgage
• Higher rate than bank (reflects second position)
• May have profit share or success fee component
• Term matches bank's construction period

Example scenario:

• 10-unit development
• Total development cost: $4.5M
• Bank will lend: $2.7M (60% LVR)
• Developer equity available: $900k (20%)
• Gap: $900k (20%)
• Luminate mezz: $900k second mortgage

Structure 3: Top-Up / Second Mortgage Funding

What it is:
Luminate provides additional funding on top of existing bank debt when banks won't increase their facility.

Best for:

• Cost overruns mid-project
• Variations and changes during construction
• Funding gaps that emerge after starting
• Presale shortfalls impacting bank drawdowns

Typical terms:

• Second mortgage behind existing bank
• Shorter term (often 6-12 months)
• Focused on getting project to completion
• Exit via sales or bank refinance

Example scenario:

• Development mid-construction
• Bank facility: $2M (fully drawn)
• Additional costs emerged: $400k (variations + delays)
• Luminate top-up: $400k second mortgage
• Term: 9 months to completion + selldown
• Exit: Repaid from unit sales

Structure 4: Mixed First and Second Mortgages

What it is:
Luminate provides funding across multiple titles or stages, using combinations of first and second mortgages.

Best for:

• Complex sites with multiple titles
• Staged developments
• Portfolio situations where developer has other properties
• Maximizing total funding available

Example scenario:

• Developer has multiple properties
• Development site: Luminate first mortgage $1.2M
• Developer's rental property: Luminate second mortgage $300k
• Developer's home: Luminate second mortgage $200k
• Total funding: $1.7M across portfolio
• Repayment: From development sales

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Real-World Case Study: The Declined Townhouse Development

The Developer

Name: James (experienced builder, 2nd development project)
Track record: Successfully completed 2-unit subdivision 2 years prior
Reputation: Excellent—known for quality work and on-time delivery

The Project

Location: Growing suburban area, 30km from Auckland CBD
Site: 2,000sqm with existing dwelling, acquired for $850k
Consent: For 6 x 3-bedroom townhouses
Target market: First home buyers and investors
Comparable sales: Recent townhouses in area selling $650-700k
Construction timeline: 16 months

The Numbers

Revenue projections:

• 6 units at average $700k = $4.2M GDV
• Less costs: $3.556M
• Projected profit: $644k
• Margin: 18% of TDC

The Bank's Response

James approached his main bank (where he'd banked personally for 15 years).

Bank assessment:

• "Project looks reasonable, but you don't meet our servicing criteria"
• "Your personal income is $95k annually as a builder"
• "The loan of $2.2M doesn't service against your income"
• "We'd need 70% presales before releasing construction funding"
• "With only one completed development, you're below our track record requirement"

James's response:

"But the project generates the repayment capacity, not my salary. I'm selling the units—that's how the loan gets repaid. My previous duplex project came in on-time, on-budget, and sold within 6 weeks. Same builder, same area, same market."

Bank: "We understand, but our policy is clear. We need 70% presales."

The presale problem:

• Preselling 4-5 townhouses before construction starts is extremely difficult
• Buyers want to see progress
• Timeline delay: 9-12 months trying to presell vs. starting construction
• Market risk during delay period

James tried two other banks—similar responses. The project was sound, but he didn't fit the policy boxes.

The Luminate Solution

Application: James applied to Luminate with:

• Complete project feasibility (detailed budget, timeline, market analysis)
• Quantity surveyor cost report ($325k per unit verified independently)
• Resource consent (approved, no conditions)
• Builder commitment (same builder from duplex project, references excellent)
• Market evidence (8 comparable sales in last 9 months, $650-710k range)
• Real estate agent appraisal (market-leading agent, realistic pricing)
• Previous project track record (photos, financials, purchaser references)

Our assessment:

What we saw:

• Proven builder-developer (duplex was profitable, on-time, quality)
• Realistic budget (QS verified, contingency included)
• Strong market (8 recent comparables showing demand)
• Experienced team (builder had completed 40+ similar units)
• Conservative margin (18% profit after all costs including finance)
• Meaningful equity ($850k land + $400k cash = 35% of TDC)
• Clear exit strategy (progressive sales over 9 months)

Risk assessment: Medium-low risk

Approval: 12 days

Structure:

• Development loan: $2.16M (60% of GDV, 61% of TDC)
• Secured by: First mortgage over development site
• Term: 18 months construction + 12 months selldown
• Rate: 11.5% p.a.
• Establishment fee: 3% ($64,800)
• Interest: Capitalised during construction
• Drawdowns: Progressive based on QS certification

The Implementation

Month 1-2: Settlement, demolition, site preparation
Months 3-14: Construction (6 units built simultaneously)
Month 12: Marketing commenced
Month 14: First unit completed (Code Compliance Certificate)
Month 15: First unit sold ($695k, sold off-plan to buyer inspecting completion)
Months 15-18: Construction completed on all units
Months 18-22: Remaining 5 units sold ($680k, $690k, $705k, $685k, $710k)

The Outcome

Financial results:

Revenue:

• 6 units sold: $4,165k total
• Average price: $694k per unit
• Sold within 8 months of first completion

Costs (actual vs budget):

• Construction: $1,895k (budget $1,920k) ✓
• Consultants: $83k (budget $85k) ✓
• Council: $78k (budget $75k)
• Marketing/legal: $42k (budget $45k) ✓
• Finance costs: $389k (budget $389k) ✓
• Contingency used: $95k of $192k available
• Total costs: $3,508k (under budget)

Profit:

• Revenue: $4,165k
• Less costs: $3,508k
• Net profit: $657k
• ROI on equity ($1,250k): 52.6%
• Duration: 22 months

Finance costs context:

• Total Luminate finance costs: $389k
• As % of total profit: 59%
• As % of total revenue: 9.3%

The "expensive" finance became irrelevant against the total return.

James's reflection:

"The banks wanted 70% presales which would've delayed me 9-12 months minimum. In that time, construction costs increased 8%, and interest rates went up. If I'd waited, my margins would've been crushed.

Yes, Luminate's rate was higher—11.5% vs the 7.5% the bank quoted. But the bank's rate was hypothetical because they wouldn't lend. Luminate's rate was real and it got my project built.

The $389k in finance costs seemed big until I held the $657k profit cheque. Would I do it again? Absolutely. I'm onto my next project now—8 units this time."

The Lesson

Banks apply automated criteria that can't assess project-specific merits. Good projects get declined for policy reasons, not fundamental weaknesses.

Specialist development lenders assess the project itself: feasibility, team, demand, exit strategy. Higher rates reflect higher risk tolerance—but they enable projects banks won't touch.

For James, paying 11.5% instead of 7.5% cost an extra $150k in interest. But the alternative was no project, no $657k profit, and 9-12 months delay in a rising cost environment.

The real cost wasn't the interest rate—it was the opportunity cost of not proceeding.

Development funding makes sense when:

• Your project fundamentals are strong
• You have meaningful equity and a capable team
• The margin justifies the finance costs
• Banks decline for policy reasons, not project weakness

When Development Funding Makes Sense

✅ Development Funding Is Right When:

Banks decline for policy reasons, not project weakness

• Servicing calculator says no but project cashflow is strong
• Presale requirements don't match your market reality
• Track record requirements ignore your team's capabilities
• Geographic or property type restrictions apply

You have strong project fundamentals

• Realistic budgets with professional cost estimates
• Experienced, credible development team
• Clear market demand evidence
• Conservative timelines with buffers
• Multiple exit strategies

You have meaningful equity contribution

• Minimum 25-30% of total development cost
• Comfortable at 30-40%
• Strong at 40%+
• Mix of cash and land value acceptable

The margin justifies higher finance costs

• Profit margin of 20%+ on total development cost
• Finance costs are 5-8% of TDC (manageable)
• Project stacks up even with higher interest rates

You need certainty and speed

• Bank approval processes too slow
• Market timing is critical
• Opportunity requires fast action
• Construction timeline is optimal now

⚠️ Reconsider Development Funding When:

Project fundamentals are weak

• Unrealistic budgets or timelines
• No clear market demand
• Inexperienced team with no track record
• Insufficient contingency planning

Margins are too thin

• Profit margin under 15% of TDC
• Little buffer for cost overruns
• Finance costs consume most of profit

Exit strategy is unclear

• No backup plan if sales slow
• Unrealistic pricing expectations
• Market softening significantly
• Limited buyer pool

You have insufficient equity

• Less than 25% contribution
• Relying on further debt for equity portion
• No buffer for unexpected costs

Costs and Terms for Development Funding

Interest Rates

Rate determinants:

• Developer experience and track record
• Project complexity and construction type
• Market strength and demand evidence
• LVR and equity contribution
• Exit strategy strength and presales
• Development team quality
• Security position (first vs second mortgage)

Fee Structure

Example Total Cost

Scenario: $3M development loan, 18-month term, 11.5% rate, full development funding

In context of total project:

• Total development cost: $4.0M
• Finance costs: $632k (15.8% of TDC)
• Gross development value: $5.2M
• Development profit: $1.2M
• Finance costs as % of profit: 53%

Comparing to Bank Financing

If bank approved at 7.5% with lower fees (hypothetical):

• Interest (18 months): $337,500
• Establishment: $30,000
• Other fees: $20,000
• Total: $387,500
• Difference: $244,625 more with Luminate

Is it worth it?

If the alternative is:

• Bank declines → No project → No $1.2M profit
• 12-month delay getting bank approval → Market changes, costs increase, opportunity lost
• Cost of not proceeding: $1.2M profit foregone

Paying $244k more in finance costs to access $1.2M profit = excellent investment.

The real question isn't "Is this expensive?" but "Does the project still stack up with these costs?"

Term and Repayment Structures

Construction phase:

• Interest capitalised (added to loan balance)
• No monthly payments during construction
• Drawdowns progressive based on build completion
• Quantity surveyor verification required

Selldown phase:

• Interest-only payments once construction complete
• Loan reduces as units sell
• Partial releases granted per unit sold
• Usually 6-12 months selldown period allowed

Total typical term:

• Construction: 12-24 months
• Selldown: 6-12 months
• Total facility: 18-36 months
• Extensions available if needed

How to Structure Your Development Funding Application

The difference between approval and decline often comes down to how well you present your project. Here's how to structure a strong application.

1. Prepare Your Feasibility Study

This is the foundation of your application. A thorough feasibility study demonstrates you've thought through every aspect.

Include:

Site information:

• Legal description and title details
• Zoning and permitted uses
• Consent status (approved, applied, or timeline)
• Site constraints (geotechnical, contamination, access)
• Existing buildings or demolition requirements

Development plans:

• Architectural plans (even if preliminary)
• Unit mix (number of units, sizes, types)
• Site layout and landscaping
• Engineering reports (geotechnical, civil, structural)

Cost estimates:

• Detailed construction budget (line-by-line)
• Soft costs (consent, consultants, legal, marketing)
• Finance costs
• Contingency (minimum 5-10% of construction cost)

Market analysis:

• Comparable sales (recent, nearby, similar)
• Target buyer profile
• Demand evidence (demographic data, waitlists, agent feedback)
• Marketing strategy

Timeline:

• Consent timeline (if not yet approved)
• Construction program (realistic, builder-verified)
• Sales timeline
• Buffer periods built in

2. Demonstrate Market Demand

We need confidence units will sell. Generic statements don't cut it—provide specific evidence.

Strong demand evidence:

• Recent comparable sales (within 6-12 months, same area)
• Pre-sales or confirmed buyer interest
• Real estate agent market appraisals
• Demographic data supporting demand
• Limited competing stock

Example of strong vs weak demand evidence:

Weak: "This area is popular and properties sell well."

Strong: "Three similar 3-bedroom townhouses within 1km sold in the last 4 months at $680k, $695k, and $710k (addresses: 14 Smith St sold Feb 2025, 28 Jones Rd sold March 2025, 42 Brown Ave sold April 2025). Average days to sell: 21 days. Our real estate agent (Jane Smith, Ray White) reports 18 active buyers looking in this price range with low current stock (only 2 similar listings). Demographics show 2,400 first-home-buyer households within 5km earning $120k+ (eligible for our target price). We have 3 conditional pre-sales agreements subject to construction completion."

Specific examples with dates, prices, and sources.

3. Assemble Your Development Team

Your team's credibility significantly impacts our assessment.

Critical team members:

Red flags:

• Builder with no relevant experience
• Unlicensed or uninsured team members
• Architect designs that ignore site constraints
• No project manager for complex builds
• Cost estimates from builder only (no QS verification)
• No real estate agent engaged yet

4. Demonstrate Your Equity Contribution

We need to see meaningful skin in the game.

Acceptable equity:

• Cash (strongest)
• Land value (if you already own the site)
• Equity in other properties
• Materials or labor contribution (if you're a builder)
• Pre-construction work already completed

Equity benchmarks:

• Minimum: 25-30% of total development cost
• Comfortable: 30-40%
• Strong: 40%+

Higher equity = lower interest rate and better terms.

Example:

• Total development cost: $3.0M
• Land (owned, valued): $900k (30%)
• Cash available: $300k (10%)
• Total equity: $1.2M (40%)
• Funding required: $1.8M (60%)

5. Clarify Your Exit Strategy

How will you repay the loan? Be specific and realistic.

Primary exit strategies:

• Progressive sales: Sell units as they complete
• Bulk sale: Sell entire development to investor
• Bank refinance: Complete development, refinance to bank, hold as rentals
• Mixed: Sell some, refinance and hold others

Strong exit strategy includes:

• Realistic timeline for sales
• Pricing based on comparable evidence
• Marketing plan
• Backup options if primary strategy delays

Example of strong multi-exit strategy:

"Primary exit: Progressive sales as units complete over 9-month period starting Month 16. Target pricing $650-695k per unit based on recent comparables (supporting evidence attached). Marketing commences Month 12 with display suite in completed unit. Real estate agent engaged (contract attached).

Secondary exit: If sales slower than expected, reduce pricing 5-10% to accelerate selldown within 15-month total timeline.

Tertiary exit: Bulk sale to investor at 10% GDV discount if individual sales stall. Have had preliminary discussions with two investment buyers (letters of interest attached).

Final option: Refinance completed units to bank and hold as rentals. Bank (ASB) has provided indicative refinance terms at 70% LVR (letter attached)."

Multiple options = lower risk = better terms.

How to Apply for Development Funding

Information We Need

Project documentation:

• Site details and legal title
• Resource consent (or timeline to obtain)
• Architectural plans
• Engineering reports (geotech, civil, structural)
• Builder's quote or QS cost estimate
• Detailed development budget
• Timeline and project program
• Market analysis and comparable sales
• Marketing strategy

Financial information:

• Developer financial statements (if company) or personal financials
• Proof of equity (bank statements, property valuations)
• Current debt obligations
• Credit check authorization
• GST registration details

Team information:

• Builder details (license, references)
• Architect and consultant details
• Project manager (if applicable)
• Real estate agent engagement (if presales or marketing started)

Exit strategy:

• Sales strategy and pricing
• Timeline to sales
• Backup options if primary strategy delays
• Evidence supporting exit assumptions

Application Timeline

Total timeline: 4-5 weeks from initial inquiry to first funding drawdown

For urgent situations: Can be compressed to 2-3 weeks if documentation is complete and well-prepared

Tips for Faster Approval

1. Submit complete documentation upfront

• Don't drip-feed information
• Provide everything in first submission
• Incomplete applications slow down significantly

2. Use professional cost estimates

• QS reports carry more weight than builder quotes alone
• Shows thoroughness and reduces our risk assessment

3. Demonstrate market demand clearly

• Specific comparable sales with details
• Agent appraisals with credentials
• Pre-sales if you have them

4. Address obvious questions preemptively

• If you're first-time developer, explain your team's experience
• If timeline is long, explain why and show milestones
• If costs seem high, provide justification
• If no presales, explain demand evidence

5. Be realistic and conservative

• Conservative budgets and timelines build confidence
• Aggressive projections raise red flags
• Include adequate contingency

Frequently Asked Questions

How quickly can you approve a development loan?

Initial assessment typically takes 3-5 days once we have complete information. Full approval including valuation and due diligence usually takes 2-3 weeks. We can move faster for urgent situations. The key is providing comprehensive information upfront as incomplete applications slow everything down.

Do you fund first-time developers?

Yes, but we assess very carefully. First-time developers who are approved typically have:

• Strong building or construction background themselves
• Smaller, simpler first projects (2-4 units)
• Experienced team around them (builder and consultants)
• Higher equity contribution (35-40%)
• Very realistic budgets with professional quantity surveyor input

First-time developers attempting large complex projects with minimal equity will struggle to get funding anywhere.

What's the maximum you'll lend for development projects?

We've funded developments from $300k to $8M+. Maximum depends on:

• Project quality and location
• Developer equity and experience
• Our current portfolio composition
• Ability to syndicate with other lenders for very large projects

There's no strict cap—each project is assessed individually.

Do you require presales for development funding?

Not usually. We prefer to see market demand evidence such as:

• Comparable sales
• Agent input
• Buyer inquiry data

Rigid presale percentages aren't typically required. If presales exist they strengthen the application, but lack of presales isn't automatically disqualifying if other demand evidence is strong.

What happens if construction goes over time or budget?

Time extensions: Common, as most developments run slightly over. Extensions are usually granted with:

• Extension fee of 1-2% of facility
• Review of progress and revised timeline
• Interest continues to accrue

Cost overruns:

• Minor overruns (5-10%) usually absorbed by contingency
• Major overruns may require additional funding (which we can provide if security supports it)
• Alternatively, developer injects more equity

Can I get development funding if I've had credit issues in the past?

It depends on the issues and timing.

Minor credit issues: Late payments or resolved defaults from 3+ years ago are usually not disqualifying if:

• You can explain them
• Other factors are strong

Serious credit issues: Very difficult and likely result in decline, including:

• Recent bankruptcies
• Current defaults
• History of not meeting obligations

We're more forgiving than banks, but we're not reckless—we need confidence you'll meet obligations.

Do you fund developments outside main cities?

Yes, but we assess regional markets more carefully. We need:

• Stronger evidence of demand
• May require higher presales or lower LVR
• Builder must have local market experience
• More conservative timelines and pricing

Regional doesn't mean automatic decline—it means thorough assessment.

What if the project needs more funding mid-construction?

We can provide top-up or additional funding if:

• Security supports it (reasonable LVR)
• Project remains viable
• Overrun reason is reasonable (not due to mismanagement)
• There's a clear path to completion and repayment

Common reasons for top-ups:

• Council-required variations
• Cost inflation during construction
• Unforeseen site conditions
• Timeline delays increasing interest costs

Can you help with land acquisition too?

Sometimes. If you're acquiring land for immediate development and have strong plans, we can fund:

• Land purchase plus construction together
• Total facility that covers both
• Land drawn first, construction drawn progressively

This requires very strong project and developer.

We don't typically fund land banking—buying land to hold without immediate development plans.

Contact Luminate Financial Group:

📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
🌐 Visit luminate.co.nz

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Ready to bring your development project to life despite bank servicing constraints? Understanding alternative development funding structures is the first step toward successful project delivery. Contact Luminate Financial Group to discuss how our property development finance expertise can help fund your project based on its merits, not just a calculator's output.