Development finance is fundamentally different from a standard home loan. Rather than receiving a lump sum, funds are released in stages — aligned to construction milestones — which reduces lender risk and keeps your interest costs lower during the build phase.
The Typical Structure
A development facility generally comprises two components: the land loan (drawn at settlement) and the construction facility (drawn progressively as work is certified by a quantity surveyor).
Pre-Sales Requirements
Most lenders require a percentage of units to be pre-sold before they'll fully commit to the construction drawdown. This is typically 50–70% of the gross realisable value, though private lenders may be more flexible for experienced developers with a strong track record.
Key Cost Components
- Interest: Usually capitalised during construction, keeping your cash flow intact
- Line fee: Charged on the undrawn facility (typically 0.5–1.5% p.a.)
- Monitoring costs: Quantity surveyor and lender inspection fees at each drawdown
Working With Taprobane Finance
We have established relationships with specialist development lenders — both bank and non-bank — who understand the New Zealand market. We handle all lender liaison, structuring, and drawdown coordination so you can focus on the build.
