What Happens to a Development Loan at Practical Completion
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Practical Completion · Development Exit · Residual Stock
The build is finished, the certifier has signed off, and the facility that funded it is now the most urgent number in your business. This guide follows the decisions that come next: when the debt is actually due, what can settle before titles exist, which exit facility fits, how release prices and payout figures work, what happens if the refinance is short, and whether the remaining stock should be sold, held or used to fund the next site.
Quick Answer
A commercial development loan does not convert into a normal mortgage at practical completion. It falls due on the maturity date in your facility agreement, and is then repaid from settlements, refinanced into a residual stock or development exit facility, or taken into longer term debt if held.
Related terms you may see: development exit finance, residual stock loan, takeout finance, completion bridging and retained stock finance. They overlap, but they are not interchangeable. The correct structure depends on whether titles exist and whether the remaining stock will be sold, refinanced or held.
| What just happened | What it actually is | Where to go |
|---|---|---|
| The lender says the facility is due and the stock is not sold | A maturity problem rather than a default, provided the contractual maturity date has not passed. | How long you actually get |
| The building is finished but nothing can settle | The plan is not registered yet, so the individual titles do not legally exist. | Why a finished unit still cannot settle |
| The facility has already passed its expiry date | The debt is due now, and an extension is a fresh credit decision rather than a right. | Running past the term |
| A purchaser has not settled | A release that will not arrive, and possibly a review event independent of the expiry date. | When settlements do not arrive |
| A lender has already declined the exit | It may be a policy decline, a credit decline or simply a structure that does not fit that lender. The reason determines the next move. | After a decline |
| The lender is taking most of each settlement and little is reaching you | The release price in your facility documents, which is usually more than that lot's share of the debt. | How the lender gets paid |
| The valuation came back lower than you expected | Often a different valuation basis rather than a different market. | What the lender lends against |
| A lender will not fund that many dwellings in one building | Usually that lender's own concentration policy rather than a borrower-level APRA cap, so the answer can vary between lenders. | Concentration in one building |
| You are thinking about keeping the dwellings and leasing them | A different test entirely: income servicing rather than a sell down plan. | Keeping the stock |
| The new lender will lend, but the net advance does not clear the existing payout | A funding gap. The incoming facility has to be compared with the incumbent lender's date-specific payout figure after the new facility's retained interest and costs, not with a headline limit. | When the refinance is not enough |
| There is plenty of equity, but the retained stock will not service a long-term refinance | An exit mismatch: equity can support security, but a hold facility still has to satisfy the incoming lender's servicing policy. | When serviceability still matters |
| The current project is finished but the next site deposit is already due | A capital-sequencing problem: equity can be real but still trapped in unsold stock until a sale or refinance releases it. | Using residual-stock equity for the next site |
| You are building one house on one title to live in | A residential owner occupier construction loan with different post-construction mechanics. This guide is not about that loan. | The two different loans |
| You are the buyer waiting to settle, not the developer | This guide is written from the developer's side of the same events. | Off the plan and sunset clauses |
What happens to a development loan at practical completion?
A commercial development facility does not automatically convert into a normal mortgage at practical completion. The controlling date is the maturity or expiry date in your facility agreement. That date is commonly set at or around the end of the build with a sell-down allowance, but your facility schedule decides the actual repayment date. If the balance remains outstanding at maturity, it must be cleared from settlements, a refinance or a takeout into longer-term debt.
If you have searched this question and come away confused, that is because the internet answers it two opposite ways on the same day. One set of results says the loan automatically converts into a standard home loan once construction finishes. The other says commercial development facilities never convert and must be repaid immediately at practical completion. Both statements are in circulation, both are stated flatly, and only one of them applies to you.
The reconciliation is that they are describing two different products. A residential owner occupier construction loan, the kind used to build one house on one title for the borrower to live in, usually continues as the borrower's home loan after the construction phase rather than creating a full repayment event at completion. The repayment type after the final draw depends on that borrower's loan terms. That is fundamentally different from a commercial development facility written to be repaid from project exits.
A commercial development facility is a different instrument with a different exit. It funded the acquisition and construction of stock the borrower intends to sell, and it has a contractual maturity date. Practical completion removes the construction phase; it does not itself rewrite the loan. When the build finishes, the next question is how much time remains to maturity and what will repay the balance.
| The loan | What happens at practical completion | Who this is |
|---|---|---|
| Residential owner occupier construction loan | The construction phase ends and the lending continues as the underlying home loan, subject to that borrower's repayment terms. There is not normally a full project-debt repayment event simply because the house is complete. | A person building one house on one title to live in, on a regulated home loan. |
| Commercial development facility | The facility does not convert. At its contractual maturity date the balance falls due and is repaid from settlements, refinanced into an exit or residual stock facility, or taken out into term debt. | A developer or builder funding stock to sell, on unregulated business purpose credit. |
If the first row describes you, the rest of this guide is not your situation and there is nothing here you need to act on. If the second row describes you, everything below is about the window you are now in. For the mechanics of how the facility was structured in the first place, the parent guide covers how development finance is put together, and if the facility is running out of time before the build is finished, that is a different problem with a different answer set, covered in the guide on a development facility expiring before completion. The boundary between the two guides is the practical completion milestone itself.
One clarification worth making early, because it causes real trouble in the last month of a build. Practical completion is a building contract milestone, defined in your contract with the builder, and it is the point at which the works are complete enough to be used even though minor defects may remain. Final completion is a later milestone, after the defects liability period has run. Many development facilities are structured with maturity at or around expected practical completion rather than final completion. Read the facility schedule alongside the building contract because the debt can mature while a defects list is still open.
Development exit, residual stock or takeout: which one do you need?
You need one of three things: a facility that repays the construction debt while you finish selling, a facility secured on the tail of stock left after the first settlements, or long term debt that replaces the construction facility because you have decided to keep the dwellings. Which of the three you need is decided by your exit, not by the label on the term sheet.
Development exit finance and residual-stock finance overlap, but they are not always the same facility. Development exit is the broader transition out of construction debt and can be discussed before every individual title is ready. Residual-stock finance more specifically describes debt against completed stock that remains after completion and early settlements. Lenders use the labels inconsistently, so the product name on a term sheet matters less than the security it takes, the event that makes it available and the exit it is arranged to serve.
| Name | What it actually is | When it applies |
|---|---|---|
| Development exit finance | A facility that repays the construction or development facility once the build is complete, secured against the completed stock. | At or just before practical completion, when the original facility is expiring and the stock is not yet sold. |
| Residual stock loan | A facility over completed stock that remains unsold, usually once the lender can identify and take security over the remaining lots. | Once the project is complete and a tail of identifiable stock remains to sell or refinance. |
| Takeout finance | A facility that takes out an incumbent lender, usually a shorter term or higher cost one, and replaces it with longer or cheaper debt. | When the exit is a refinance rather than a sale, including moving from a private funder to a bank. |
| Completion bridging or completed stock finance | Short-term finance bridging the gap between physical completion and the point at which titles, settlements or a longer-term refinance actually produce cash. | Where the build is done but registration, titles or settlements are still in front of you. |
| Retained stock finance | Finance over dwellings the developer has decided to keep rather than sell, on the way to term debt. | On a deliberate hold, where the stock will be leased rather than realised. |
Do tax returns and serviceability still matter after practical completion?
It depends on the exit. A sale-led development-exit or residual-stock facility can be assessed primarily on the completed security, the sell-down evidence and the credibility of the repayment path, and some specialist lenders use lighter income verification for that reason. A hold-to-rent or longer-term refinance is different: once sales are no longer the repayment source, the lender has to be satisfied that rent and the wider borrower position can service the debt. Substantial equity does not automatically solve a hold facility that does not service.
That distinction matters for self-employed developers because the financials used to obtain the original construction facility may no longer describe the post-completion business. Tell the lender which exit is being sought before producing a generic document pack. A lender testing a sale-led exit needs a different proof set from a lender being asked to carry the stock for years.
Whatever the term sheet calls it, the underwriting question is the same one: what repays this facility, and what evidence is there that it will, which is the exit strategy in the sense a lender uses the term. Our map of construction finance from pre-start to residual stock sets out where this facility sits in the sequence. If you want the product level detail on any of these, the commercial property lending page and the residual stock loan glossary entry both go a layer deeper than this guide needs to.
How long do you actually get after practical completion?
Whatever period you get after practical completion is a term in your facility agreement, not a market standard, and you can read your own number today rather than looking for a general one. There is no published norm, no regulator sets one, and the figures circulating online disagree with each other because each one is a single lender's product being described as though it were the rule.
That matters more than it sounds. Search this question and you will find several confident answers giving different periods, none of them sourced to anything, and none of them binding on the lender that actually holds your facility. The number that governs you is in your own documents, and it is usually easy to find once you know which clauses to read.
| What to read | What it decides | What to look for |
|---|---|---|
| The expiry or maturity date on the facility schedule | The date the balance falls due, and the date every other decision is measured backwards from. | On most development facilities it is set by reference to an expected practical completion date plus a sell down tail. |
| The extension option | Whether more time is yours to take or the lender's to grant. | An option exercisable at your election is a very different asset to a request the lender may refuse. Read which one you hold. |
| The extension fee and any repricing on extension | What the extra time costs, and whether the facility reprices when you take it. | Typically expressed against the facility limit or the balance, and it varies by lender. |
| The partial release and release price mechanics | How much of each settlement goes to the lender and how much comes back to you. | This is what actually sets the pace of your sell down, and it is the clause most developers have never read. |
| Any review event or minimum sales covenant | Whether the facility can come to a head before the expiry date. | A sell down falling behind an agreed schedule can trip these independently of the calendar. |
What you get after practical completion is, in practice, only long enough to do one of three things. Each has a different evidence requirement and each leads somewhere different.
| Exit | What the lender needs to see | Where it leads |
|---|---|---|
| Sell down | Executed contracts reconciled to the sales schedule, purchasers who can actually settle, titles in existence or a credible registration path, and a release price per lot that clears the debt on the units that remain. | The facility is repaid progressively out of settlements and discharged when the last release clears the balance. |
| Refinance into an exit or residual stock facility | A valuation instructed on the right basis, a realistic sell down plan for the remaining stock, and a clean explanation of why the original facility is not being repaid on time. | A new short term facility over the completed stock, priced for the risk, buying a defined window to finish selling. |
| Take out into term debt and hold | Signed leases rather than rental appraisals, evidence the holding is serviceable from income rather than from sales, and a structure the incoming lender's policy can actually accommodate. | Longer term commercial or investment debt over dwellings that are now being held rather than sold. |
What should you do 90, 60, 30 and 7 days before maturity?
A practical exit timetable starts about 90 days before maturity with the facility documents and title path, moves into valuation and lender selection around 60 days, closes conditions and security releases around 30 days, and uses the final week to reconcile the date-specific payout and settlement destinations. These are working checkpoints, not legal or lender deadlines, and your own facility may require earlier notice.
| Timing | What you do | What this prevents |
|---|---|---|
| About 90 days | Read the maturity date, extension clause and release mechanics together. Establish exactly where the subdivision or strata plan sits and decide whether the base case is sell down, exit refinance or hold. | Discovering too late that the loan expires before titles, settlements or an exercisable extension can do the work. |
| About 60 days | Reconcile the sales schedule to executed contracts, issue the exit pack to the right lender pool and confirm the valuation basis before the valuer is instructed. | Wasting the remaining term on a lender whose policy, valuation basis or evidence requirements do not fit the stock. |
| About 30 days | Close the incoming lender's conditions, confirm occupancy and title evidence, start the incumbent discharge process and identify every other mortgage, caveat, guarantee or security consent that can affect settlement. | An approved facility sitting idle because the legal and security work was treated as a settlement-day task. |
| About 7 days | Reconcile the proposed settlement date to the current payout, release prices, purchaser settlements, GST or other withholding instructions and the electronic settlement workspace with your solicitor or conveyancer. | Assuming the contract prices or the credit-approved loan amount equal the cash that will actually be available to discharge the existing facility. |
| Every day in the final week | Ask what exact item prevents settlement today, who owns it and what evidence closes it. | A vague approved-but-waiting file where nobody owns the last unresolved condition. |
| Alongside all of it | Put contract, titling, security-release and default questions to a solicitor, and GST or any change from selling to holding to a registered tax agent or accountant. | A finance solution being ready while a legal, title or tax condition still blocks the actual settlement. |
Our note on how a lender tests your sell down plan covers what that presentation needs to contain, and what lenders test in a feasibility covers the assumptions that were baked in at the start and are now being measured.
What should you send a lender for a post-completion exit refinance?
For a first credit review, the exit pack should let the lender answer five questions without reconstructing the project from emails: what is owed today, what stock is left, what can legally settle, what is the stock worth on the lender's basis, and exactly what repays the new facility. If one item is not ready, say that plainly and show the path to it rather than leaving a gap for credit to discover.
| Item | What the lender is trying to establish | What to provide |
|---|---|---|
| Current debt and timing | How much has to be repaid and how much contractual time remains. | Facility schedule, maturity date, extension position and a current or requested payout figure to the proposed settlement date. |
| Remaining stock and sales | Which lots are sold, which are genuinely settling and which remain exposed to the market. | A stock and sales schedule that reconciles to executed contracts, settlement dates and current asking prices. |
| Completion and titles | Whether the construction risk has ended and whether individual lots can be transferred. | Practical-completion and occupancy evidence where applicable, plus the exact plan-registration and title position. |
| Valuation | Which value is being used to size the new debt. | The existing valuation if available, the instruction basis, settled comparable sales and any material change since the report. |
| Exit and use of funds | How the new facility is repaid and whether any surplus advance has a defined job. | Sell-down assumptions, proposed release mechanics, hold-and-lease evidence if relevant, and the purpose of any equity release such as the next-site deposit. |
The strongest pack is not the longest one. It is the one where the payout, sales schedule, title position, valuation basis and exit tell the same story. That is also why a lender decline should be diagnosed before the file is sent anywhere else: a new application does not fix a contradiction in the underlying pack.
How does a partial discharge, release price and payout figure work?
A partial discharge lets one lot settle while the lender keeps its mortgage over the unsold lots. The lender releases that lot after receiving the release price required under the facility documents. A payout figure is different: it is the amount required to repay and discharge the entire facility on a nominated date.
This is the part of the process most likely to be misunderstood, because almost everything published on partial discharges in Australia is written for home loan borrowers taking one property out of a two property loan. The word is the same and the mechanics are not. On a development facility the release price is set by the facility documents or an agreed release schedule rather than invented on settlement day. It may be set above a lot's simple pro-rata share so the debt reduces faster as the security pool shrinks. The exact formula is lender- and facility-specific, so the number to model is the documented release requirement for each lot, not an assumed percentage.
| The term | What it means on a development facility | Why it is not the home loan version |
|---|---|---|
| Partial discharge | The lender releases one lot from its mortgage so that lot can be transferred, leaving the mortgage over everything unsold. | On a home loan it is a one off event. Here it happens on every settlement and the entire facility is built around it. |
| Release price | The amount the lender requires from that settlement before it will sign the discharge. | It is set by the facility documents or release schedule. It can be higher than a simple pro-rata share of the debt, depending on the agreed formula. |
| Payout figure | The date-specific amount the incumbent lender requires to discharge the whole facility, which can include accrued or capitalised interest and other amounts payable under the facility documents. | Your statement balance and your payout figure are not necessarily the same number. Reconcile the date-specific payout before relying on a refinance surplus. |
| Settlement destinations | The settlement statement allocates money to the outgoing mortgagee, the ATO where withholding applies, statutory and contract adjustments, and other authorised destinations before any residue reaches the developer. | The contract price is not the same thing as cash available to reduce the development debt, so the release price has to be tested against the actual settlement sources and uses. |
| A discounted lot | Still has to satisfy the release requirement in the facility documents unless the lender agrees to vary it. | A price cut can therefore reduce your residue sharply if the lender does not reduce the release requirement, which is why the release schedule has to be modelled alongside any discount decision. |
| Timing | The discharge has to be requested from the lender and prepared ahead of the settlement date rather than on it. | On a single home loan a delay affects one transaction. Here it can stall a run of settlements and the release schedule they were feeding. |
How much of a unit's sale price actually reaches the lender at settlement?
The contract price is not the amount available to reduce the development loan. Before a lot settles, reconcile the deposit already paid or held, settlement adjustments, any GST amount the purchaser must pay directly to the ATO, any foreign resident capital gains withholding, the lender's release price and every other settlement destination. The number that matters is the net settlement money available against the release requirement, not the headline sale price.
For new residential premises, the ATO's GST at settlement guidance says most purchasers with a withholding obligation pay the withheld amount directly to the ATO and the balance of the sale price to the supplier. The amount is generally 1/11 of the contract price for a fully taxable supply and 7 per cent of the contract price where the margin scheme applies. Separately, for contracts signed on or after 1 January 2025, the foreign resident capital gains withholding rate is 15 per cent and the threshold has been removed; an Australian resident vendor generally needs a valid clearance certificate to stop that withholding. GST withholding and foreign resident capital gains withholding are tax rules, not lender release rules, and the actual treatment belongs with the solicitor and registered tax adviser handling the sale.
| Line | Illustrative amount | What it means |
|---|---|---|
| Contract price | $900,000 | The headline sale price. It is not automatically the amount arriving to the developer or lender at settlement. |
| 10 per cent deposit already paid or held | $90,000 | Whether and when this is available depends on the contract and how the deposit is held or released. Do not count it twice in the settlement sources. |
| GST withholding, fully taxable example | $81,818 | Using the ATO's general 1/11 withholding example, this amount is paid to the ATO rather than to the supplier at settlement. A margin-scheme sale uses a different withholding calculation. |
| Balance before other settlement adjustments | $728,182 | This is $900,000 less the $90,000 deposit and $81,818 GST withholding. Rates, tax, legal, agent and other settlement destinations can change the final figure. |
| Foreign resident capital gains withholding | Check the vendor position | If a valid Australian-resident clearance certificate or other relief is not in place and the withholding rules apply, a further amount can be directed to the ATO. Do not assume GST withholding is the only tax line. |
| Lender release price | Facility-specific | The settlement still has to satisfy the lender's documented release requirement, or the lender has to agree to a variation before that title can be released. |
| Developer residue | Whatever remains | This is the number that can be used elsewhere after the settlement destinations and required debt reduction are actually funded. |
What if there is mezzanine debt, a second mortgage, a caveat or another secured lender?
A first-mortgage release does not by itself resolve every other security in a development capital stack. Before an individual lot can transfer or a new exit lender can settle, the solicitor should identify every mortgage, caveat, general security, guarantee and priority or subordination arrangement that touches the borrower, guarantors or secured property, then confirm which parties must consent, discharge, withdraw or be repaid under those documents.
- The senior facility documents control the senior lender's release. Australian development-finance documentation commonly includes a first mortgage, general security, guarantees and subordination arrangements, and can restrict additional debt or encumbrances. Maddocks' Australian developer guidance on project finance and facility agreements sets out that security architecture.
- Second-ranking and mezzanine debt have to be mapped, not assumed away. A priority or intercreditor deed can govern consent rights, repayment order and what each lender can do when security is released. The answer therefore sits in the executed finance documents, not in a general rule that the first lender simply gets paid and everyone else disappears.
- Caveats and other registered interests can be settlement items in their own right. PEXA Exchange supports mortgages, discharges, caveats and withdrawals, but the legal entitlement to lodge or withdraw them and the conditions for doing so belong with the transaction solicitor.
- Guarantees and cross-security need an explicit release check. Repaying one facility or releasing one title is not a safe reason to assume every guarantee or other secured property has been released. Ask for the written release position for each guarantor and each security before treating the old capital stack as cleared.
Two consequences are worth carrying into the rest of this guide. The first is that your sell down does not reduce the debt at the rate the sale prices suggest, it reduces it at the rate the release prices dictate, so a project can look half sold and still be a long way from repaid. The second is that if a settlement runs late the exposure is not only the delay, and our note on penalty interest on a late settlement covers that side, while a shortfall at settlement covers what happens when the money arriving does not meet what has to be paid.
What can still stop the exit refinance after it is approved?
Approval is not settlement. The last mile can still fail if the outgoing lender has not completed its discharge steps, a title or registration condition is outstanding, the valuation carries an unresolved condition, occupancy or insurance evidence is missing, the incoming lender's documents or security consents are incomplete, another mortgagee or caveator has not dealt with its security, or a purchaser settlement that formed part of the sources and uses does not happen. Treat the refinance as settlement-ready only when the incoming lender, outgoing lender and settlement representatives are working to the same payout date and security-release sequence.
Do not treat the absence of a final payout figure several days out as proof that the refinance cannot settle. PEXA's vendor guidance says the outgoing mortgagee can enter the payout figure into the electronic workspace the day before or on the day of settlement. The practical question is whether the discharge has been set up, the parties are in the workspace and every other condition is ready for that number when it arrives.
If timing is tight, ask one operational question every day: what exact item prevents this facility from settling today? That turns a vague "approved but waiting" file into a finite list of conditions that can be owned by the broker, borrower, solicitor, valuer, registry or lender.
What happens if the facility runs past its term?
If the facility runs past its contractual term, the balance is due. Unless the documents give you an exercisable extension option, more time is a fresh credit decision rather than a right. Default or higher pricing may apply if the facility documents provide for it, and the lender may have enforcement rights once the debt is due. None of that changes because the building itself is complete.
Passing the expiry date is also not the same event as breaching a covenant, and the difference is worth holding onto because it changes what you are negotiating. A covenant breach is a failure of a promise inside a live facility, and it usually opens a conversation about waiver or remedy. Reaching expiry with the balance outstanding is a failure to repay a debt that is now due, and the facility no longer has a term to run.
Practically, several things change at once:
- Extension becomes a new credit decision. It is not a right, it is an application, and it is assessed against today's facts rather than the ones in the original credit paper.
- Pricing usually moves. Many development facilities provide for default or higher pricing once the debt is past due, and some also provide for additional fees. Whether they apply, and the amount, is governed by your own documents.
- Enforcement rights become available. Whether or not a lender uses them, the fact that they exist changes the balance of every subsequent conversation.
- The file changes character to every other lender. A developer refinancing before expiry is presenting a completed project. The same developer three months past expiry is presenting a distressed file, and the market prices it accordingly.
What should you do in the first 48 hours if the facility will not be repaid on time?
If it is now clear the facility will miss maturity, the first job is to turn the problem into exact dates and numbers before the lender has to do it for you. In the first 48 hours, obtain or request the current payout, read the extension and default provisions with the solicitor, reconcile every scheduled settlement and release price, establish the title position, and give the incumbent lender a credible written plan rather than a promise that sales are coming.
In the first week, decide which path is actually executable: documented extension, accelerated settlements, residual-stock or development-exit refinance, longer-term hold debt, or short-term bridging/private finance while a permanent exit is completed. If a formal demand, receiver appointment, mortgagee-possession step or other enforcement notice arrives, move that legal question to the solicitor immediately. The finance work should continue in parallel, but it should not guess at the legal effect of an enforcement document.
There is one point on this that almost nobody in the finance market writes about, and it is worth stating carefully. Default interest clauses in Australian commercial loan agreements are not automatically enforceable. They are subject to the penalty doctrine, which is a general law principle about whether a contractual consequence of breach is a genuine protection of a legitimate interest or an out of proportion punishment. Whether any particular clause survives that test depends on the clause, the facility and the circumstances, and it is a question for a solicitor, not for a broker and not for a guide.
The argument is live in Australian courts on exactly this kind of facility. In Blackbird First Mortgage Corporation Pty Ltd v CAM Engineering and Construction Pty Ltd [2025] NSWSC 1146, a proceeding in the Supreme Court of New South Wales over a non bank first mortgage facility to a construction company, the borrowers' defence pleaded that the lender was not entitled to charge default interest and that the default interest rate and additional charges were unenforceable penalties. That judgment, delivered 2 October 2025, decided a procedural question about whether the defendants could file a cross claim out of time. It did not decide the penalty question, and nothing in it tells you whether the default interest on your own facility is or is not enforceable. What it does show is that the argument is being run, on this exact lender type and this exact facility type, and that a developer who has been handed a default interest calculation is entitled to have a solicitor read the clause before treating the number as settled.
What changes after a lender has already declined the exit?
A decline changes the file rather than the project, and the next lender will ask about the decline before it asks about the stock. The most useful thing you can do in the first day after one is establish which kind of decline it was, because a policy decline and a credit decline lead to completely different next moves and they are rarely explained clearly at the time.
| What changes | Why it happens | What to do about it |
|---|---|---|
| The decline becomes a question on every later enquiry | Brokers and credit teams ask what the previous answer was and why, and they ask early. | Be able to name the reason in one sentence. An unexplained decline reads worse than the reason usually turns out to be. |
| The reason is often policy rather than credit | Concentration in one building, the security type, the location, or a funder simply being closed to the asset class that month. | A policy decline is not a verdict on the project and does not need re-litigating. Establish which it was before rebuilding anything. |
| Time becomes the scarce input rather than price | Every application consumes weeks you were spending on the expiry date, and a second decline costs more than a higher rate. | Approach the funders whose written policy already fits the stock, rather than working down a list by price. |
| The valuation question reopens | Valuations are ordinarily instructed by and for a particular lender, so a new lender may not simply adopt the last one. | Ask before anything is ordered whether the incoming lender will accept a transfer or reassignment of the existing report, and on what basis it was instructed. |
| The shape of the lender pool changes | Banks, non bank commercial lenders and private funders sit at different points on time, price and flexibility, and a decline usually moves you along that line. | Choose on the constraint that is actually binding, which at this stage is almost always time rather than rate. |
If the pressure at this point is coming from the funder rather than from the sell down, for example where a construction financier has withdrawn or a builder has failed, that is a materially different problem and it has its own guide on what to do when a construction funder withdraws. Where the shortfall is being covered with short term security while a longer solution is arranged, private lending and second mortgage structures are the usual instruments, and both are worth understanding before you need them rather than after.
Why can't a finished unit settle before the title is registered?
A finished unit cannot be transferred as its own lot until the relevant strata plan or plan of subdivision is registered and the individual title exists. That makes registration a finance event as well as a conveyancing event: settlement proceeds, partial discharges and a true lot-by-lot residual-stock structure all depend on titles that can actually be transferred.
If you have arrived here as a purchaser rather than a developer, the same registration step is what governs when you can be required to complete, and the buyer's side of these events is covered in the guide on a sunset clause approaching on an off the plan contract. Everything below is written from the developer's side.
The sequence is jurisdiction specific in its detail and consistent in its shape. In broad terms, and in the order the delays actually occur:
| Step | Who controls it | What it means for you |
|---|---|---|
| A licensed surveyor prepares the plan of subdivision or strata plan | Your surveyor | The first item on this critical path, and it does not have to wait for the last defect to be closed out. |
| The council or relevant authority certifies the plan and issues its statement of compliance or equivalent | The council or authority | Typically requires the conditions of the development approval to have been satisfied first. |
| The plan is lodged with the state land registry | Your surveyor or conveyancer | In most jurisdictions this is done electronically. |
| The registry examines the plan and requisitions anything that does not satisfy its requirements | The land registry | A registry-controlled step that can run beyond the project programme, particularly if requisitions have to be answered. |
| On registration the plan becomes the title diagram and separate titles come into existence for each lot | The land registry | The first moment at which any lot in the development can be transferred at all. |
| A lot is transferred and the purchaser can be required to complete | Contract and statute | Some jurisdictions add a statutory period after the registered plan is served on the purchaser before completion can be required. |
Finance distinction: some lenders will not treat the position as a true residual-stock facility until individual titles exist. Before registration, the same economic problem may instead be underwritten as development-exit finance over the existing project security. Terminology varies by lender, so ask what security the proposed facility actually takes rather than relying on the product label.
Victoria is one worked example of that process rather than a national rule, and each state and territory runs its own. Land Use Victoria states that "when a plan of subdivision is registered, the plan (or the compiled plan, if applicable) becomes the title diagram for the new folios of the register", that "only a licensed surveyor can prepare a plan of subdivision or consolidation", and that under the Registrar's requirements for paper conveyancing "all plans first signed by the surveyor on or after 1 January 2020 must be submitted in SPEAR" (Land Use Victoria, understanding plans of subdivision and consolidation, page last updated 21 May 2026, read 27 August 2026). Notably, that page publishes no registration timeframe at all, which is why this guide gives none. Any number you find quoted for how long registration takes is somebody's experience, not a published standard, and it is the wrong thing to build a facility expiry around.
Then there is a statutory tail on top of registration that surprises developers every time. In New South Wales, a vendor under an off the plan contract must, before completion, serve on the purchaser a copy of the registered plan and any other document registered with it, and section 66ZP(2) of the Conveyancing Act 1919 (NSW) provides that "the purchaser is not required to complete the contract earlier than 21 days after receiving copies of the registered plan and other documents". That is 21 days of interest running after the registry has finished, before the first dollar can arrive, and it is a statutory floor rather than a negotiating position (statute read live 27 August 2026, general information only, and your own contract and jurisdiction govern). Western Australia runs a comparable protection from the other direction: Consumer Protection Western Australia states that buyers "have the right to cancel a contract if the deadline to register the strata/survey strata plan is not met" (page last updated 16 December 2024).
Now put that against the facility. Four things follow, and they are the reason this section exists:
- Interest runs while the plan sits with the registry. The facility does not pause because the examination is taking longer than expected, and capitalised interest keeps accruing against a project that is physically finished.
- The release waterfall cannot start. Partial releases are keyed to settlements, and settlements are keyed to titles. Until titles exist there is no mechanism by which the debt reduces at all, however many contracts you hold.
- Your maturity date takes no account of the registry's queue. The expiry date was negotiated against an expected practical completion date. Check whether the registration path and any statutory settlement tail were separately allowed for when the maturity date was set.
- The sell down tail is measured from the wrong point. If the facility clock starts before titles can settle, part of the contractual runway can be consumed before the first settlement is legally possible.
The titling questions themselves are conveyancing and property law rather than finance, and they belong with your solicitor.
What does the new lender actually lend against?
An exit lender does not lend against one universal "project value". It sizes the facility against the valuation basis it accepts for the remaining stock, and the same completed project can produce materially different numbers depending on whether the valuer is considering individual market values, an as-is completed-stock value, a bulk or in-one-line sale, or a compressed sale scenario. The basis matters before the percentage does.
On a completed development there are at least five numbers that can all honestly be called the value of the project, and they are not close to each other. A term sheet quoting a percentage without naming its basis is not telling you what you will get.
| Basis | What it describes | What it does to the loan |
|---|---|---|
| As is value of completed stock | What the finished dwellings are worth today, in their current state, on the assumption of an orderly sale over a normal marketing period. | A common reference point for completed-stock lending, subject to the incoming lender's policy and the exact valuation instruction. It is a present-tense number and it moves with the local market. |
| As if complete value | What the project would be worth once finished, assessed while it is not yet finished, on stated assumptions about completion. | The basis the original development facility was sized against. Quoting it after practical completion overstates the security, because the assumptions it carried have now either happened or not. |
| In one line or bulk sale basis | What the remaining stock would fetch sold as a single parcel to one buyer, rather than lot by lot to individual purchasers. | Typically lower than the sum of individual retail values because one buyer is taking the stock and the sell-down risk together. Some lenders use it where concentration or sell-down risk is material. |
| Aggregate of individual unit values, also called gross realisation value | The sum of what each dwelling is worth sold separately to its own purchaser over the time that takes. This is the number your feasibility was built on, and it travels under several names: gross realisation value or GRV, and net realisable value or NRV once selling costs are taken out. | Often the highest headline figure because it aggregates individual sale values over time. It is not automatically the amount an exit lender will lend against. |
| Forced sale value | What the stock is estimated to fetch where the seller has to sell inside a compressed period rather than over a normal marketing campaign. See forced sale value. | Generally a lower downside figure because it assumes a compressed sale period. It is not a normal substitute for reading the lender's actual valuation instruction, but a more conservative sale basis can reduce what can be lent against stock that has not physically changed. |
The valuation basis is not left to chance on the lender's side either. ASIC's disclosure benchmarks for unlisted mortgage schemes, which is how a good deal of non bank property lending in Australia is funded, set out a valuation policy benchmark under which the board requires, in relation to security property for a loan, an independent valuation to be obtained "before the issue of a loan and on renewal", and specifically "for development property, on both an 'as is' and 'as if complete' basis" and "for all other property, on an 'as is' basis" (ASIC Regulatory Guide 45, Benchmark 5, RG 45.47(e)(i), guide published 5 March 2026, read 27 August 2026). This is a disclosure benchmark for those schemes rather than a rule about what you can borrow, and it is included here for one reason: it tells you that a lender being asked to fund a development is expected to hold both numbers, which means the basis it quotes you against is a choice it has made.
What this does to your cash is the part that decides whether the exit works. Every dollar the facility is sized down by is a dollar you have to find from equity or from a second facility, and the gap between the aggregate of individual values and an in one line basis on the same stock is not a rounding difference. Two term sheets quoting the same headline percentage against different bases are not comparable offers, and the first question on any exit term sheet should be which basis the percentage is measured against and what the valuer was instructed to assume.
Two of those five deserve naming out loud, because they are the terms your own documents and your valuer will use while this guide has been describing them in plain words. Gross realisation value is the aggregate figure, and it is what the approval numbers on the original facility were built from, which our note on the numbers behind a development finance approval works through. Forced sale value is the downside end of the range described here, and the distance between it and GRV can be large even though the physical stock is unchanged. The related trap is a valuation that comes back under the contract price on individual settlements, which affects your purchasers rather than you, and is covered in the guide on a bank valuation under the purchase price. For what a commercial valuer is actually testing when the security is income producing rather than for sale, see what a commercial valuation actually tests.
From our broking, indicative
Across the post completion files we place, the difference between a deal that lands and a deal that stalls is almost never the building. It is the order and quality of what arrives with the enquiry. As at August 2026, what an incoming lender wants to see, roughly in this order, is: the registration position and whether titles exist yet; an executed sales schedule that reconciles line by line to the contracts; the valuation instruction, including the basis the valuer was given; the position with the incumbent lender and how much time is genuinely left; and only then the numbers on the remaining stock.
A file that lands well answers the awkward question before it is asked. A file that stalls leaves it to be discovered. In practice these are the things that get post completion deals declined, and every one of them is drawn from deals we have worked on rather than from any published source:
- The plan is not registered and no title exists yet, and the enquiry is silent about where it sits in the registry.
- The sales schedule cannot be reconciled to the executed contracts, so nobody can tell which lots are genuinely committed.
- Purchasers who cannot settle are still being counted as sold.
- The valuation was instructed on the wrong basis for the facility being sought.
- There are too many dwellings in one building for a single lender's own credit policy to take.
- The body corporate or owners corporation is not yet established.
- Defects remain outstanding against the occupancy certificate.
- The developer has come to market after the facility has already passed its term rather than before it.
Indicative only, based on deals we have placed, and qualitative by design: this block carries no rate, no loan to value band, no fee and no approval timeframe, because on a topic where the failure branch is financial distress an indicative range reads as an approval likelihood. Not a quote and not an offer. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
What if the refinance does not fully repay the existing development lender?
If the incoming lender's net advance is less than the incumbent lender's date-specific payout figure, the refinance does not settle by itself. That is a funding gap, even where the project still has substantial equity on paper. The calculation to reconcile is net cash available from the new facility versus the payout required on the proposed settlement date, not headline facility limit versus statement balance.
| Where the gap comes from | What it changes | What to do next |
|---|---|---|
| The valuation basis is lower than the developer expected | The same percentage produces a smaller gross facility. | Confirm the instruction basis and whether the lender is actually sizing against as-is, individual values, an in-one-line basis or another stated measure. |
| The payout is higher than the statement balance | Accrued or capitalised interest and other amounts under the facility documents can change the discharge figure by settlement date. | Request a date-specific payout early enough to structure against the real number. |
| The headline facility is not the net advance | Retained interest, establishment costs, lender legal costs or other funded amounts can reduce the cash available at settlement. | Put a sources-and-uses reconciliation beside the term sheet before accepting it. |
| A settlement expected before refinance does not arrive | Debt stays higher and that lot remains in the security pool. | Re-run the refinance assuming the settlement does not happen rather than treating uncertain proceeds as cash. |
| The gap remains after the numbers are corrected | The transaction needs another source of repayment or a different structure. | Options can include borrower equity, an actual settlement, a negotiated extension or restructure, or another permitted layer of finance. Any second-ranking or subordinated security depends on lender consent, priority and legal documentation. |
This is the point at which comparing term sheets by rate becomes actively misleading. A lower-priced facility that leaves a payout gap is not a completed exit. Compare the net advance, security released, release schedule, time to maturity and the exact cash required to settle the old lender.
Why won't a lender finance several unsold units in the same building?
Because lenders set their own concentration policies for exposure to one building, project or borrower group. APRA does not prescribe a borrower-level rule saying that a lender may fund only a particular number of units in one development. The practical limit therefore varies by lender, and the first job is to identify which concentration measure actually caused the decline. This is worth saying plainly, because the answer circulating online treats the cap as though it were something imposed from above, and developers accordingly stop asking.
The prudential framework does contain exposure limits, and they are not what people think. Prudential Standard APS 221 Large Exposures, in force since 1 January 2023, makes an authorised deposit taking institution's board responsible for oversight of its large exposures and risk concentrations and for approving the policies that govern them, and requires those policies to be reviewed at least annually against the institution's own risk appetite, risk profile and balance sheet. The hard numerical limit it does set is at the level of the whole institution: aggregate large exposures to a counterparty or group of connected counterparties must not exceed a stated share of the institution's Tier 1 capital, currently expressed as 25 per cent, with different treatment for certain sovereign and interbank exposures (APRA, Prudential Standard APS 221 Large Exposures, effective 1 January 2023, read 27 August 2026). That is a capital measure for the bank, not a borrowing limit for you, and it says nothing at all about how many dwellings in one building any lender will fund.
So APS 221 does not prescribe a fixed number of units that an individual borrower may finance in one development. What exists instead is a prudential framework under which each institution sets and manages its own limits. Which is exactly why the answer differs depending on who you ask, and why the correct response to a decline on concentration grounds is not to give up but to ask three questions:
- What is the actual policy limit, and is it a hard limit or a delegated one? Some limits sit at branch or credit officer level and can be escalated.
- Is it measured on units, on floor area, on dollar exposure, or as a share of the building? The same portfolio passes one measure and fails another.
- Does it apply per lender or per borrower group? If the binding limit is lender-specific, splitting the stock across funders may help. If the issue is borrower-group exposure, security structure or another policy rule, it may not.
In practice, spreading concentrated stock across more than one funder, or moving the concentrated portion to a lender whose policy is written around this exact scenario, is a normal structuring answer rather than an exotic one. Non bank and private funders in the commercial property lending and private lending markets set their own concentration policies too, and some are written specifically for developers holding multiple lots in one building. Our note on holding completed townhouses works through what that looks like on a small project.
What if the presale settlements do not arrive?
From the developer's side, a purchaser who fails to settle is a repayment that does not arrive against a facility that is already due, and that is a different problem from the contractual one. The contractual remedies are well covered elsewhere and they are genuinely a matter for your solicitor: issuing a default notice, terminating, dealing with the deposit, claiming damages and reselling are all governed by the contract and by the law of the state the land is in. Take that part to a solicitor and take it early, because the finance consequences run on a faster clock than the legal ones.
What almost nobody addresses is what happens to the facility while that plays out. Four things, in roughly this order:
- The release does not happen. That lot's contribution to the debt reduction is not merely delayed, it is removed from the schedule until the lot is resold and settled.
- The sell down schedule stops reconciling. If the facility carries a minimum sales covenant or a review event, a failed settlement can trip it independently of the expiry date.
- The lot goes back to market as remaining stock, not as a fresh release. It has been on the market, it has a history, and the second buyer is often a harder buyer.
- Your remaining unsold stock is revalued in the lender's mind. One failed settlement is an event. Two is a pattern, and the lender starts asking whether the sell down assumption itself was wrong.
What if the purchaser cannot settle because their finance or valuation falls over?
From the development facility's perspective, the immediate result is the same: the expected settlement proceeds do not arrive and that lot does not reduce the debt on schedule. The buyer's legal position depends on the contract and the law of the state, but your finance model should stop counting the lot as debt reduction until funds actually settle. If the problem is a purchaser valuation below contract price, that buyer-side shortfall is covered separately in the guide on a bank valuation under the purchase price.
There is a related correction worth making here, because it explains why presales carried so much weight in the first place and why the number everyone quotes is softer than it sounds. APRA has not set a minimum presale requirement. The figure quoted at developers as though it were regulation is, on the regulator's own account, an observation of what lenders were doing at a particular moment. APRA's March 2017 letter to authorised deposit taking institutions on commercial property lending is nine years old, and in February 2025 APRA published a clarification stating that the reference to presales coverage in that letter "does not represent a minimum requirement or expectation" and was "a reflection of industry practice observed at the time" (APRA, clarification of the March 2017 letter regarding commercial property lending, published 13 February 2025, read 27 August 2026). What binds any individual lender is that lender's credit policy, which is a negotiation rather than a rule.
What does exist in the prudential rules is a capital treatment, and it is a condition on the bank rather than a requirement on you. Under APRA's capital rules for authorised deposit taking institutions, an institution must apply a risk weight of 150 per cent to land acquisition, development and construction exposures generally, with a lower 100 per cent treatment available for residential development exposures that meet stated conditions, one of which, for exposures above a stated dollar threshold per development, is that qualifying pre-sales are at least equal to 100 per cent of the total debt (APRA, Prudential Standard APS 112, paragraphs 29 and 30, version in force 1 July 2025, read 27 August 2026). That is a condition of the bank's own capital treatment. It is not a rule about what you must presell, it is not a borrowing limit, and it has never been an interest rate.
If failed settlements have pushed the sell down behind the facility rather than merely behind schedule, the practical question becomes the expiry conversation covered above, and if the facility is going to run out before the build itself is done, that is the neighbouring guide on a development facility expiring before completion. Our note on what happens when the facility expires with units unsold is the closest thing we have written to a step by step on the same event.
What changes if you keep the stock instead of selling it?
Keeping the stock changes what the debt is repaid by, and that is the decision, not the product. A sell down repays the facility out of capital, once. A hold repays it out of income, indefinitely, which means the incoming lender stops testing your sales plan and starts testing whether the dwellings can service the debt without you. Developers arrive at this decision two ways: deliberately, because holding was always the plan, or reluctantly, because the market has not cleared the stock and discounting looks worse than waiting. The finance is the same either way. The scrutiny is not.
What a lender tests on a hold is different in kind from what it tested on the build:
- Signed leases, not rental appraisals. An appraisal is an opinion about what the dwelling might let for. A lease is evidence, and on a hold facility the difference is decisive.
- Whether the dwellings are funded individually or under one facility. One facility over the whole holding is usually simpler and cheaper to arrange. Individual facilities give you the ability to sell one dwelling later without disturbing the rest. This choice is much harder to change afterwards than to make now.
- Servicing evidence that does not depend on the next sale. If the numbers only work when one more lot settles, it is not a hold, it is a sell down with a longer horizon, and the lender will treat it as one.
- The concentration question again. Everything in the section above applies with more force on a hold, because the exposure is now long dated rather than short.
- The unglamorous conditions. Owners corporation established, defects closed out against the occupancy certificate, insurances in place, and any developer obligations under the plan discharged.
Is it cheaper to discount the last units or to pay for more time?
There is no general answer, because it turns on figures specific to your facility and your stock, but the comparison is a fixed set of items and you can work through it in an afternoon. Most developers run this decision on interest alone, which is the one input that favours discounting, and leave out the effect a discounted sale has on every lot still to sell. Put both columns in front of you before you move on price.
| What to put in the comparison | Cutting the price to clear it now | Paying for time and holding on |
|---|---|---|
| Interest and line fees | Stop earlier, and on a capitalised facility that is the strongest argument on this side. | Keep running, and on a capitalised facility they compound against an asset that is already finished. |
| Extension or new facility costs | Not incurred if the sale clears the debt inside the current term. | Extension fee or establishment fee, a fresh valuation, and legal costs on the new facility. |
| Effect on the lots still to sell | The discounted sale becomes the comparable evidence for every remaining lot, and for the valuer who looks at them next. | The evidence base is unchanged, which matters most where several lots remain. |
| Holding costs while you wait | End at settlement. | Rates, insurance, owners corporation levies, presentation and continued marketing. |
| The valuation basis the lender uses | Repeated discounting is what moves a lender toward an in one line or bulk basis on the rest. | Stays on an as is basis for as long as the sell down remains credible to the lender. |
| The tax position | Proceeds fall in the year you sell. | A change from selling to holding can change the treatment, and that belongs with a registered tax agent before the decision. |
The tax position on a pivot from selling to holding is genuinely load bearing and it is the part most likely to be discovered late. The Australian Taxation Office treats residential premises as new residential premises where they have been rented out for less than five years, and can continue to treat them as new in other circumstances where they have been marketed for sale while rented (ATO, GST and residential property, read 27 August 2026). The ATO also says a developer who claimed GST credits while constructing new residential property for sale may need a GST adjustment if the actual use changes and the completed stock is rented before sale (ATO, change in creditable purpose for property, read 27 August 2026). Whether an adjustment arises and what happens on an eventual sale depends on facts this guide cannot see. Take the decision to a registered tax agent or accountant before changing the use, not after.
Can you use the equity in unsold stock to fund the next development site?
Sometimes. If the completed stock supports a facility larger than the amount needed to repay the construction lender and the costs of the new facility, the surplus may be released for an approved business purpose such as a deposit or settlement on the next site. The number that matters is the net equity release after the incumbent payout, not the value of the unsold stock by itself.
That decision links the last project to the next one, so model both facilities together. A large release can help secure the next site, but it also leaves more debt sitting against the stock that still has to sell or service itself. The release prices on the current project, the maturity of the residual-stock facility and the settlement date on the next site therefore need to work as one sequence rather than three separate transactions. Our note on releasing equity from unsold stock for the next site covers that growth use case in detail.
Where the hold is the plan from the start rather than the fallback, build to rent is its own structure with its own funding market, and it is covered in the guide on build to rent in Australia. For the signals that tell you which way to go on a specific project, see when to hold and refinance commercial stock, and if the reason for holding is that the equity is needed for the next site, releasing equity from unsold stock for the next site covers that path. The concept itself sits in the glossary under retain and refinance.
Practical completion is a finance event, not just a building one, but it is not automatically the loan's maturity date. The facility schedule controls. From there the job is to reconcile four clocks and numbers at once: the maturity date, the title-registration and settlement path, the incoming lender's valuation basis, and the incumbent lender's payout. If the net refinance clears the payout, the remaining stock can sell down, move into a residual-stock facility or become a longer-term hold. If it does not, you have a funding gap that has to be solved before settlement. And if there is surplus equity after the payout, that same completed stock may become the first funding input for the next site.
Key takeaway: read the contractual maturity date and extension clause first, then reconcile titles, settlements, valuation basis and the date-specific payout. Do not assume practical completion, registration and loan maturity happen on the same day.Frequently Asked Questions
Practical completion and final completion are different milestones in the building contract. Practical completion is the earlier point at which the works are complete enough to be used or occupied even though minor defects may remain. Final completion comes later, after the defects liability period and outstanding items have been dealt with. The development loan's maturity date is a separate contractual date in the facility documents, although it may have been structured around expected practical completion and a sell-down period. That is why a facility can be approaching maturity while defects are still being closed out.
On a residential owner occupier construction loan, repayments are interest only on the amount drawn during the build, and once construction finishes the facility converts to ordinary principal and interest repayments on the same loan. On a commercial development facility the mechanism is different: interest is commonly capitalised rather than paid monthly, so nothing is repaid at all during the build, and the whole balance including the capitalised interest falls due at maturity. That is why a developer and an owner builder can ask the same question and need opposite answers, and why the first thing to establish is which of the two facilities you actually hold. The commercial version is described on the development finance page.
A residual stock loan is a facility secured against completed stock that remains unsold after a development is finished. It is used to repay or replace construction debt and give the borrower a defined period to sell, refinance or in some cases release equity from the remaining stock. The facility is sized against the incoming lender's accepted valuation basis and reduces as stock settles under the agreed release mechanics. It is usually transitional finance rather than the final long-term home for stock the developer intends to keep.
No. A commercial development facility does not automatically turn into a normal mortgage when the build is finished. It remains commercial project debt until it is repaid, refinanced or otherwise restructured, and the balance falls due on the contractual maturity date in the facility documents. That is different from a residential owner occupier construction loan, which usually continues as the borrower's home loan after the construction phase subject to its own repayment terms.
There is no market standard for how long lenders give you to sell down after practical completion, because it is a term in your individual facility agreement rather than a convention. The period that governs you is set by the expiry date on your facility schedule, and it is modified by whatever extension option, extension fee and review event clauses sit alongside it. The figures quoted online vary widely and each one is a single lender's product described as though it were the rule, so the only reliable number is your own. Read the expiry date, the extension clause and the release price mechanics together, which the section on how long you actually get works through, and if you want to see how the sell down assumption was tested at the outset, our note on how a lender tests your sell down plan covers it.
No. A unit cannot settle before the strata plan or plan of subdivision is registered, because until registration the individual lot has no separate title to transfer. Registration is the step that creates the new folios of the register and brings the individual titles into existence, and it sits with the state land registry rather than with the developer, the builder or the lender. In some states there is a further statutory period after the registered plan is served on the purchaser before that purchaser is required to complete. This is why a finished building can still produce no cash, and why the facility clock and the ability to sell do not start at the same moment, as explained in the section on why finished does not mean saleable.
Because the limit on how many units in one building a lender will fund is that lender's own credit policy, not a regulatory cap. APRA's Prudential Standard APS 221 Large Exposures, in force since 1 January 2023, makes each institution's board responsible for setting and approving prudent limits on large exposures and risk concentrations, and its hard numerical limit is expressed against the institution's own Tier 1 capital at the level of a counterparty or connected group. Nothing in it prescribes a number of dwellings in a single development. The practical consequence is that the answer varies by lender and is negotiable, and that spreading the stock across more than one funder is a normal structuring response rather than an exotic one, which the section on concentration works through.
From the developer's side, a purchaser who fails to settle removes that lot's contribution from the release schedule, so the debt does not reduce as planned and the sell down stops reconciling to the facility. If the facility carries a minimum sales covenant or a review event, one failed settlement can trip it independently of the expiry date, and the lot returns to market as remaining stock rather than as a fresh release. The contractual remedies against the purchaser, including default notices, termination, the deposit and any claim for damages, are governed by the contract and by the law of the state the land is in, and they belong with your solicitor rather than your broker. The finance side is covered in the section on presale settlements that do not arrive.
Yes, but keeping the units changes the exit test. A sale-led facility is repaid from settlements; a hold facility must be supportable from rent and the wider borrower position under the incoming lender's policy. Signed leases and established income can therefore matter more than the sales schedule, and concentration in one building can still limit the lender pool. The tax consequences of changing from selling to holding can also be material, so the finance and tax decisions should be made together.
A partial discharge is the lender releasing one lot from its mortgage so that lot can transfer while the mortgage remains over the unsold stock. The lender releases the lot under the release mechanics in the facility documents, usually after receiving the required release price. The release price may be higher than a simple pro-rata share of the debt depending on the agreed formula. A payout figure is different: it is the date-specific amount required to discharge the whole facility. The contract price is not the same as the money available for the release, because deposits, tax withholding and settlement adjustments can change the cash actually available on settlement day.
Forced sale value is an estimate based on a compressed or constrained selling period rather than an ordinary marketing period, so it is generally a more conservative downside figure than normal market-value assumptions. On completed unsold development stock, a lender using a more conservative sale basis can reduce the amount it is prepared to advance even though the physical stock has not changed. It should not be confused with gross realisation value, which aggregates the individual lot values over the time needed to sell them separately.
Then you have a funding gap. Compare the incoming lender's net advance with the incumbent lender's date-specific payout figure, not the headline facility limit with the statement balance. If the net advance is short, the gap has to be covered by actual settlement proceeds, borrower equity, a negotiated extension or restructure, or another permitted layer of finance. A second-ranking or subordinated facility only works where the lenders' consent, priority and security requirements allow it. The section on a refinance that does not clear the payout shows the reconciliation to run before accepting terms.
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