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Is A Deposit Needed For A Development Loan?

Engineers on a construction site | Financial Information | Tiger Finance

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If you’re looking to apply for a development loan, you might be wondering if you will need a deposit to put towards your development loan. In most cases, a deposit will be needed in order to qualify for a development loan, although the percentage of the deposit may vary depending on your lender, the size of the loan, and how much your property’s projected value is.

If you’re looking to find out about development loans and deposits, read on below.

What is a development loan?

A property development loan is designed to fund the construction of multiple properties under the same title. For developments of up to four units, funding falls under a residential property loan. For any larger development, a commercial property loan is needed.

When looking at development loans, it is important to understand the two different types. Knowing which loan is right for your development will save you both money and time spent lodging documents, and get you on your way to building much faster.

Most lenders split property development into two categories:

  • Residential- Most lenders define residential property development as a small scale development of up to four units.
  • Commercial- If your property development is greater than four residential units, lenders are likely to class it as commercial property development. This can range from a series of commercial properties to an apartment complex. 

Is a deposit needed for a development loan?


In most cases, a deposit of at least 5% of the property’s projected value will be needed for a development loan. This figure may vary from lender to lender, but generally, you may find that some sort of deposit will be needed for your development loan. Your lender will be able to advise you on how much your deposit will be.


What else do you need to apply for a development loan?

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Depending on what type of development loan you choose to apply for, different forms of documentation may be needed. Some lenders may take a tougher approach when considering an application for a development loan, meaning that you might need to provide a range of personal details and extra documentation in addition to the lending standard criteria.

Along with the usual forms of identification such as a drivers’ licence or a passport, you will need to provide your financial details. Documents such as bank statements and details of your assets and liabilities may also be needed.

Your lender may also ask for details of the property you want to purchase, such as its location, as well as requesting a professional valuation to determine how much the property is worth.

It’s always worth speaking directly to your lender to find out what exactly will be required of you, and when.  

The stages of development loans

Funds for residential property loans are generally released at the end of each building stage instead of in one lump sum. This is to ensure that you are continually able to pay your builder throughout the construction process. Because your loan will be paid out in stages, it’s important to be aware of what those stages are.

  • The deposit
  • Base stage
  • Frame stage
  • Lock-up stage
  • Fixing stage

It’s at the end of each of these five stages that your funds will be released for you to pay your builder and tradespeople, as well as to make sure that your build is progressing correctly. 

Where does Tiger Finance come in?

With Tiger Finance, we can help to get you a loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.

We have helped countless Australians with both good and bad credit ratings to be funded for their dream development. We understand that lending criteria from other lenders are too strict and can stop you from achieving your goals.

How we can help

Our finance specialists can help you find the right development loan for your project. Development loans are a complicated topic, but we will find a loan that makes your dream project that much easier.

If you are one of the many Australians finding getting a development loan difficult, Tiger Finance can make the process simple and pain-free. Call one of our loan specialists for your free initial consultation today!

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