Quick Summary
- No pre-sale development finance lets Melbourne developers start construction without securing off-the-plan buyers first.
- Lenders fund up to 70–80% of Total Development Cost (TDC) or 65% of Gross Realisable Value (GRV).
- Completed properties sell for more than off-the-plan stock, which is often enough to outweigh the higher interest rate.
If you’re a property developer in Melbourne, you already know the drill.
You find a great site, secure the necessary town planning and council permits, and approach your bank for construction funding. Then comes the hurdle: the bank demands a high level of debt coverage through off-the-plan presales before they’ll release a single dollar.
Securing presales in a fluctuating market is stressful and time-consuming. Worse, it forces you to sell your stock at today’s prices, capping your potential profit.
At Melbourne Finance, based in North Melbourne, we specialise in helping developers bypass this roadblock.
Here’s everything you need to know about securing no-presale development finance for your next project.
What is no-presale development finance?
No-presale development finance is a construction loan that doesn’t require you to sell any of your townhouses, apartments, or commercial units off-the-plan before construction begins.
Instead of relying on major banks, this type of funding is typically sourced through our network of private lenders, specialised non-bank lenders, and family offices who assess the viability of the project differently from traditional institutions.
Why do traditional banks insist on presales?
Major banks are highly risk-averse. And their presales requirements are designed to protect them, not you.
When a bank looks at a development application, it sees a vacant block of land and an expensive construction contract.
To mitigate their risk, they want guaranteed buyers already lined up. Usually, banks require enough presales to cover 100% of the debt facility before funds are released.
This creates a massive headache for you, the developer. Selling off-the-plan often means heavy marketing costs, high agent commissions upfront, and pressure to offer discounts to entice early buyers, all before a single slab has been poured.
The benefits of bypassing presales
Opting for no-presale funding is a deliberate strategy for many experienced developers, not just a fallback option.
- Start construction immediately.
In development, time is money. Without the months-long delay of marketing and securing presales, you can engage your builder and break ground much faster.
- Maximise your final sale price.
Buyers will almost always pay a premium for a completed property they can walk through and inspect, compared to a floor plan in a brochure. By holding your stock until the project is finished, you capture the capital growth that occurred during the build and maximise your Gross Realisable Value (GRV).
- Save on early marketing costs.
You can defer your major real estate marketing campaigns until the property is built and looking its best, easing your initial cash flow.
What’s the catch? The reality of no-presales development finance
We believe in being completely transparent with our clients. So here’s the reality: no-presales finance costs more than a bank loan.
Because the lender is taking on more risk by not requiring presales, the interest rates and establishment fees for these loans will be higher than a major bank would charge.
However, a higher interest rate on a 12-to-18-month construction facility is often heavily outweighed by the higher final sale prices you achieve by selling completed stock.
When we sit down with you, we run a comprehensive feasibility study to ensure the math makes sense for your specific bottom line.
What do lenders look for?
If lenders aren’t looking at presales, what are they assessing? Non-bank lenders focus on the fundamental strength of the project.
- Location
Strong demand areas in Melbourne (like the inner-north, middle-ring suburbs, and growth corridors) are highly favourable.
- Feasibility
A clear, realistic breakdown of your Hard Costs (construction) and Soft Costs (permits, town planning, engineering and holding fees).
- Builder
A signed, fixed-price contract with a reputable builder who has a track record of similar projects.
- Loan-to-Value Ratio (LVR)
Lenders will typically fund up to 65%–70% of the Gross Realisable Value (GRV) or up to 80% of the Total Development Cost (TDC).
How a mortgage broker can help
You generally can’t walk into a major bank and ask for no-presale funding. This sector of commercial finance relies heavily on relationships.
As finance brokers in North Melbourne, we have established relationships with specialised private lenders who are actively looking to fund well-structured development projects.
We know how to present your development feasibility in a way that gets approved. We negotiate the loan terms, interest rates, and drawdown schedules on your behalf so you can focus on the project.
Ready to get your Melbourne development off the ground?
Don’t let presale demands hold you back.
Get in touch with Melbourne Finance today to discuss your project’s feasibility and funding options.