What Is a Residual Stock Loan? Funding Unsold Units After Completion
Property Lending Hub
Residual stock loans · Unsold completed units · Construction facility maturity
The build is finished, the construction facility is close to its end date, and some units have not sold. This guide explains how a residual stock loan works, how lenders size it, what it really costs, who lends against completed stock and what to check before you sign.
Quick Answer
A residual stock loan is a short term loan secured over finished development units that have not sold. It repays the construction facility, is sized on what the unsold stock is worth today, and is repaid as each unit settles.
What is a residual stock loan?
A residual stock loan is a loan secured over finished development units that have not sold. It repays the construction facility, gives the developer time to sell the rest, and is repaid as each unit settles.
It is a property loan over completed dwellings or lots. It is not a loan against shares, and it is not the residual value on an equipment or vehicle loan. A report prepared for ASIC on the private credit market notes that unsold units are often financed with residual stock finance to repay the construction lender. Source: ASIC Report 814, section 10.2, published 22 September 2025, read 17 September 2026.
Also called: residual stock finance, residual stock facility, unsold stock loan.
A residual stock loan sits at the point where the build is done and the sales are not. Developers often confuse it with three other kinds of funding, and the differences matter when you are deciding what to ask for.
| Funding | Usually provided by | What it pays for | How it differs |
|---|---|---|---|
| Residual stock loan | A new lender, often a non-bank or private credit fund | Repaying the construction lender while the finished units sell | Sized on the as is value of finished stock and repaid as each unit settles |
| Extension of the construction facility | The existing construction lender | Extra time on the same loan | Same lender, same loan, on that lender's terms and fees |
| Loan over a project that is not finished | A construction or completion lender | Finishing the build as well as selling it | The lender also carries the risk that the build is not completed |
| Separate investment loans on each unit | A bank or non-bank lender | Holding the units long term | Tested on rent and income rather than on sales |
General guide only. Lenders use these labels differently, so check what a term sheet actually offers.
If the build is still underway, read what applies if the build is not finished yet, because that is a different loan with different tests.
Which of these fits depends on what you plan to do with the stock. Our practical completion guide sets out the choice between a development exit, residual stock or takeout loan in one place, so this guide stays with the residual stock loan itself.
It usually fits when
- The project has reached completion and titles are registered
- The stock is priced near the market
- Sales need more time than the facility allows
- The developer wants equity back for the next project
It usually does not fit when
- The build is not finished
- The price list sits well above recent sales
- There is no realistic plan to sell or refinance
- The units have defects or approvals outstanding
What are your options when completed units have not sold?
You can refinance the unsold stock with a residual stock loan, ask the existing lender for more time, cut the price on the remaining units, sell them together to one buyer, or keep them and refinance onto investment or commercial loans. The right choice depends on how close the price list is to the market and how long the stock will take to sell.
In practice, the decision turns on two questions. Is the price list close to what buyers are actually paying, and how long will the remaining units realistically take to sell? If the price is right and time is the problem, a residual stock loan buys time. If the price is wrong, more time rarely fixes it. Whether to discount or pay for more time is a trade-off at the facility end date, and these signals to refinance rather than discount show when keeping the stock is the better call.
| Option | When it fits | What it costs you | Main risk | First question to ask |
|---|---|---|---|---|
| Residual stock loan | Stock is titled and saleable, pricing is realistic, sales need more time | New lender fees and usually a higher rate than the construction facility | The term runs out before the stock sells | Will the net advance cover the construction payout? |
| Extension from the existing lender | The lender is comfortable and only a short extra period is needed | An extension fee and possible repricing | The lender declines late or adds conditions | What does the extension cost, and when must you decide? |
| Cut the price on the remaining units | The market has moved and time costs more than price | Lower sale proceeds and margin | Sets a lower comparable price for the rest of the building | What price do settled sales in the building support? |
| Sell the remaining units to one buyer | Several units are left and one buyer wants them all | A deeper discount than single sales | Valuers may treat the bulk price as the market level | How far below individual prices is the bulk offer? |
| Keep the units and refinance onto investment or commercial loans | The developer wants to hold and can pay the loans | Ongoing holding costs, and GST credits may need adjusting if rented | Serviceability and tax treatment | Does the rent support the loans, and do GST credits need adjusting? |
| Second-ranking or mezzanine money behind the main lender | A gap remains after the main refinance | The highest cost in the funding stack | Priority and consent | Will the first lender consent to a second lender? |
General guide only. The right option depends on your contract, your lender and your tax position.
What should you do first if the construction facility is close to expiry?
Start with the maturity date and a payout figure for the expected refinance date, then work backwards. The refinance only works if the net cash released at settlement clears the outgoing debt and leaves a workable exit, so the headline loan amount is the last number to look at, not the first.
- Read the maturity and extension clauses. Confirm the due date, any review date, what notice is required and what changes if the term expires.
- Get a current payout figure. Use the amount required on the expected refinance date, including accrued interest and known discharge or extension costs.
- Freeze the stock schedule. Mark every lot as settled, unconditional but unsettled, conditional, under offer or unsold, with expected settlement dates.
- Confirm what is actually complete. Titles, occupancy or completion approval, defects, services and any registration step still outstanding can change the product and the valuation basis.
- Model the net advance against the payout. Allow for GST, retained or capitalised interest, lender fees, and legal and valuation costs before deciding that a headline loan-to-value ratio solves the problem.
Can you get residual stock finance before titles are registered?
Usually not at settlement, because lenders commonly describe residual stock as completed, separately saleable stock, with occupancy approval in hand and individual titles or a strata plan registered. You can start the refinance before registration, but if titles or occupancy approval are still outstanding, the facility that settles may need to be a development exit, take-out or construction refinance rather than a residual stock loan.
If the project is physically complete but titles are not registered, or the existing facility has already passed maturity, the boundary shifts. Read what changes if the project is not yet fully complete rather than forcing the file into a residual stock label.
Most developers weigh these options inside their wider development finance plan rather than one at a time. A price cut and a residual stock loan can work together, for example, where a modest reset brings the stock back to the evidence and the loan covers the time the sales still need.
Keeping the units changes both the loan and the tax position. Refinancing onto longer loans and holding the units as rentals is a different borrowing test from a sell-down, because the lender looks at rent and income rather than sales. The ATO's view of how held stock is treated for tax matters before you decide. Where a gap remains after the main refinance, mezzanine finance can sit behind the first lender, at the highest cost in the stack.
Two tax questions to raise with your accountant before you keep the units:
- Do GST credits need adjusting? The ATO says that if you rent out new premises while you are planning to sell them, you will need to adjust part of the GST credits you claimed. Source: ATO, Building and construction: residential premises, last updated 10 July 2020, read 17 September 2026.
- Are the units still trading stock? Land held for resale in a business of dealing in land is generally trading stock, and sales that are part of a property development business are treated as ordinary income. Source: ATO, TD 92/124 and Tax consequences on sales of property, last updated 27 February 2025, read 17 September 2026.
General information only, not tax or financial advice. The answer depends on your facts.
If the loan is not repaid, who sells the units and what must they do?
If a company borrower defaults, the lender can appoint a receiver or sell as mortgagee, and the law requires reasonable care to get market value or the best price reasonably obtainable. The duty depends on who sells and where the land is. Our guide to the first 48 hours if the facility will not be repaid covers what to do before it gets that far, and this read on when a senior lender calls in receivers explains the timing pressure once it does.
| Who sells | Law, section and heading | What the law requires | Where it applies |
|---|---|---|---|
| Receiver or other controller of a company's property | Corporations Act 2001 (Cth) s 420A, Controller's duty of care in exercising power of sale | Take all reasonable care to sell for not less than market value, or the best price reasonably obtainable if there is no market value | Company property anywhere in Australia |
| Mortgagee in NSW | Conveyancing Act 1919 (NSW) s 111A, Duties of mortgagees and chargees in respect of sale price of land | Take reasonable care to sell for not less than market value, or the best price that may reasonably be obtained; the duty also binds the selling agent and applies despite any stipulation to the contrary | Land in NSW |
| Mortgagee in Victoria | Transfer of Land Act 1958 (Vic) s 77 | May sell after default and notice, but must act in good faith and have regard to the interests of the mortgagor | Land in Victoria |
| Mortgagee in Queensland | Property Law Act 2023 (Qld) s 116, Duty to sell at market value | Take reasonable care to sell at market value; s 127, Contracting out prohibited, stops the mortgage from excluding the duty | Land in Queensland, under the Act that replaced the Property Law Act 1974 |
Sources read 17 September 2026. Summaries only, not legal advice. Other states and territories have their own rules.
What counts as an event of default is set by your loan documents, not by the stock sitting unsold. If a default notice or demand has arrived, speak to a solicitor before you sign anything.
How much can you borrow against unsold completed units?
You can typically borrow around 65 to 70 per cent of what the unsold units are worth today, over a term that commonly runs 6 to 24 months, illustrative and varies by lender. The lender sizes the loan on the as is value of the finished stock after allowing for the GST that comes out of each sale, not on the original feasibility or the price list.
What valuation do residual stock lenders use?
Ask which value the lender will run its loan limit against, because there is no single basis. Lenders variously set limits against the as is completed value, distinguish the total of individual retail prices from a lower in one line value, or use an adopted value after adjusting for settled and unsettled sales. Those figures are not interchangeable.
What lenders actually look at first is the valuation of the unsold stock. Completed stock is valued on an as is basis, meaning its market value in its current state, and for finished units that should be the same as the completed value. If a figure is labelled as if complete, something is still unfinished, so ask what. The valuer may value each lot on its own or give an in one line value for all remaining lots sold together, which is lower because a buyer taking several units at once expects a discount. Sales already settled in the same project are the strongest evidence a valuer has. A price list that has drifted away from those sales pulls the figure down, however good the finishes are. ASIC describes the as is and as if complete bases in ASIC Report 820, footnote 15, November 2025, read 17 September 2026.
| Valuation figure | What it means | Why it matters to the loan |
|---|---|---|
| As is completed value | Market value of the finished stock in its current condition | A common base for completed residual stock |
| Individual retail total | The sum of the lots sold one at a time through a normal campaign | Usually higher than a sale of the whole parcel, but the lender still tests whether those prices are supported by evidence |
| In one line or bulk value | What the remaining stock may fetch if sold together to one buyer | Lower because the buyer takes the holding and sell-down risk, so a loan limit applied to it produces a smaller facility |
| Adopted lender value | The figure the lender actually uses after its treatment of settled sales, unsettled sales or other policy adjustments | The raw valuation can look strong while the figure used for credit is lower |
| As if complete value | Value assuming outstanding works are completed | If this figure is still doing the work, the project may need a completion or exit structure rather than a residual stock loan |
General guide only. Ask the lender, in writing, which figure its loan limit uses.
The lender then applies its loan-to-value ratio limit to that value, after allowing for the GST each sale carries. GST matters because the developer does not keep the full sale price, and how the margin scheme affects funding changes how much of each sale is left to repay debt. That is why the net advance can come in below the amount needed to repay the construction lender, leaving a shortfall to fund from somewhere else. Where the value is comfortably above the payout, some developers release equity for the next site instead.
| Rule | What it means for each sale | Source |
|---|---|---|
| New residential premises built for sale | You are liable for GST on the sale | ATO, Building and construction: residential premises, last updated 10 July 2020 |
| Margin scheme | GST is 1/11 of the margin rather than of the full price, if you are eligible and agree it in writing with the buyer | ATO, Calculating the GST payable, last updated 19 August 2021 |
| GST at settlement | The buyer generally withholds 1/11th of the contract price, or 7% for margin scheme sales, and pays it to the ATO at settlement; sales between associates use a different basis | ATO, GST at settlement, last updated 4 June 2025 |
General information only, not tax or financial advice. Get tax advice on your project.
| Step | Illustrative amount | What it shows |
|---|---|---|
| As is value of 9 unsold apartments, including GST | $5,850,000 ($650,000 each) | The starting figure is the valuation, not the price list |
| Less GST at 1/11 of each price, no margin scheme | $531,818 | Part of every sale goes to the ATO, not to the loan |
| Value net of GST | $5,318,182 | The figure the loan limit is applied to in this example |
| Loan limit at 65% | $3,456,818 | The gross facility |
| Less interest budget held inside the limit | $400,000 | Capitalised or prepaid interest reduces the cash released |
| Cash available at settlement | $3,056,818 | What can go to the construction lender |
| Construction facility payout | $3,400,000 | The amount that must be repaid |
| Shortfall to fund | $343,182 | Equity, a price reset or second-ranking money has to cover it |
Illustrative only, not an offer. Lenders differ on the loan limit, how GST is allowed for and how the interest budget is set.
What happens if the residual stock refinance does not clear the construction payout?
The refinance cannot complete until the gap is solved or the outgoing lender agrees to another arrangement. The gap is the difference between the construction payout on the settlement date and the net cash the new facility can release after GST, retained or capitalised interest and costs.
Ways to close it include contributing equity, settling more contracted sales first, reducing any planned equity release, negotiating a documented extension or restructure with the outgoing lender, or adding subordinated funding the senior lender accepts. A second mortgage or mezzanine facility is not automatic: the first lender's consent, a priority deed and total leverage decide whether it works. The incoming lender cannot discharge the outgoing mortgage for less than the outgoing lender requires.
How is interest paid on a residual stock loan?
Interest is usually capitalised into the loan, prepaid from the advance at settlement, or paid monthly, and each choice changes how much cash the loan actually releases.
- Capitalised. Capitalised interest is added to the balance and repaid from sales. There are no monthly payments, but the balance grows and headroom shrinks the longer the stock takes to sell.
- Prepaid. Interest for part or all of the term is held back from the advance at settlement, so the net cash released is lower from day one.
- Serviced. Interest is paid monthly from rent or other income, and the lender tests that income before it agrees.
The loan term and any extension are set in the offer. Each settlement pays a release price agreed up front, sometimes called a release amount, so every sale reduces the loan by a known figure rather than whatever the lender asks for on the day. The release price can be set above the share of the loan allocated to that unit, which pays the loan down faster than the stock sells and leaves less cash from each sale. If the stock sells slower than planned, the lender reviews the loan rather than rolling it over automatically, which is why how lenders test a sell-down plan matters at application, not only at the end.
What happens after each unit or lot sells?
When a buyer settles, the lender releases that lot from its mortgage once it receives the agreed release price. The settlement statement also deals with GST and transaction costs, and only the surplus the facility allows comes back to the developer, so the loan balance and the remaining security change after every settlement.
What happens if the residual stock loan expires before all the stock sells?
The loan does not roll over automatically because stock remains. You normally need an approved extension, a replacement refinance or enough sale proceeds to repay the balance by maturity. An extension is a fresh credit decision that can bring a new valuation, fee or price, and if the loan is not repaid when due, the default and enforcement clauses in your documents take over.
| Stage | What changes | What the developer should do |
|---|---|---|
| Sales are behind plan before maturity | The lender can reassess the exit, remaining stock, valuation and interest headroom | Update the stock schedule, payout and cash flow model, then compare an extension, a refinance and a price reset while there is still time |
| Maturity arrives with debt outstanding | The debt is due under the facility documents; unsold stock does not create an automatic rollover | Have an approved extension, a replacement facility or enough settlement proceeds arranged before the due date |
| The facility is in default | Default interest, fees, notices and enforcement rights depend on the signed documents and the law | Get legal advice on the documents straight away and keep the lender informed of a credible repayment or refinance path |
| A receiver is appointed to a company borrower | A secured creditor can appoint a receiver where its security allows, and the receiver takes control of secured assets to collect and sell enough to repay the secured debt | Treat it as enforcement and get insolvency and property law advice; the directors' control over those assets is restricted |
Receivership summary from ASIC INFO 54, Receivership: a guide for creditors, read 17 September 2026. General information only, not legal advice.
What does a residual stock loan cost?
A residual stock loan costs the interest rate plus fees, and the fees can add materially to the total: expect an establishment fee, possibly a line fee, a fee on each release or on exit, valuation and legal costs on both sides, extension fees if more time is needed, and default interest if the loan runs late.
- Establishment fee, charged when the loan is set up.
- Line fee, charged by some lenders on the facility limit rather than the drawn balance.
- Release or exit fee, charged as each unit settles or when the loan is repaid.
- Valuation costs, for the lender's own valuation and any revaluation during the term.
- Legal costs, for the lender's lawyers, which you usually pay, and for your own.
- Broker fee, where one is charged.
- Extension fee, if the lender agrees to more time at the end of the term.
- Default interest, if the loan runs past its term or another default occurs.
Compare offers on the total cost over the expected sell-down period, not on the headline rate. A lower rate with a fee on every release can cost more than a higher rate without one, depending on how many units remain and how fast they sell. Lenders price that risk from the exit backwards, and how an underwriter scores the exit shows what moves the price.
Who lends against completed unsold stock?
Most residual stock loans come from non-bank lenders and private credit funds. Banks may extend an existing client's facility, but they often step back from taking out another lender's unsold stock.
Bank capital rules explain part of this. APRA's standard APS 112 treats a loan as land acquisition, development and construction lending only while its main security is not fully completed, so finished stock usually falls outside that category. What can still weigh on a bank is the test for a standard loan: a bank must be able to show the borrower can meet repayments, and a loan with capitalised interest and no income may not pass, which makes it non-standard and more expensive in capital to hold. A non-bank lender is not bound by those rules. Private credit has grown into a large part of the market, much of it real estate focused, and a report prepared for ASIC names construction and development as the area of private credit most in need of improvement. This read on the non-bank development market covers how that appetite is moving, and private lending for developers is where most residual stock files end up.
| Lender type | Typical appetite | How it is regulated | What to check |
|---|---|---|---|
| Major bank | Selective; more likely to extend an existing client than take out another lender | Prudentially supervised by APRA | Whether it will lend on completed stock at all |
| Non-bank lender | A core source of residual stock loans | Not a bank; may be an APRA registered financial corporation, which reports data but is not supervised | Funding source, track record, AFCA membership |
| Private credit fund | Active, especially on larger or complex files | Fund rules and ASIC oversight of the fund, not of your loan terms | Valuation practice, fees, related party arrangements |
| Private or contributory mortgage fund | Smaller files and shorter terms | As for private credit funds | Whether the money is committed before you sign |
General guide only. Individual lenders within each type differ.
What should you check about a private or non-bank lender before signing?
Check where the lender's money comes from, whether the funds are committed before you sign, the full fee schedule, and what happens if sales run slow. Registration with APRA is not supervision.
From the underwriter's seat, a residual stock loan is only as reliable as the money behind it. A lender that has to raise funds after you accept its offer can leave you short on the day the construction facility must be repaid. Knowing how private lending is regulated helps you ask the right questions, and these are the six checks that matter most on completed stock.
- Is the funding committed, or does the lender still need to raise it? Ask in writing, and ask what happens to your settlement if the money is not there.
- Is the lender a registered financial corporation? A non-bank lender with more than $50 million in assets that provides finance must register with APRA, but registered financial corporations are not subject to supervisory oversight. Registration is for data collection, not supervision, and APRA says the law prohibits a registered financial corporation from advertising that it is registered with APRA, so treat that claim as a warning sign. Source: APRA, Registered financial corporations and the list of registered financial corporations, updated 7 September 2026, read 17 September 2026.
- Get every fee in writing, including fees charged at each stage or on each release. Ask who keeps any extension or roll-over fee. ASIC reviewed 28 private credit funds, found most of the 8 wholesale funds lent to real estate, and described a fund whose strategy produced new line fees at each stage of a property development. It also found some wholesale fund managers kept origination and other fees, including extension, restructure or roll-over fees, without disclosing the amount. It was a sample of funds, not the whole market. Source: ASIC Report 820, 5 November 2025, read 17 September 2026.
- Ask how the lender values stock, how often it revalues, and which value its loan limit uses. The report prepared for ASIC found that it is not always clear whether a loan-to-value ratio is based on cost, current value or forecast completion value. On finished stock, ask for the as is value.
- Understand the protection gap. ASIC notes that loans to companies are not subject to the credit legislation, and that most property development is done through companies. A loan to a natural person to buy land and build residential dwellings will generally be regulated, even where that person develops several properties. Source: ASIC INFO 101, Does the credit legislation apply?, reissued October 2020, read 17 September 2026, and ASIC RG 203, Do I need a credit licence?. AFCA can only consider complaints about its members, and for small businesses with fewer than 100 employees the credit facility must not exceed $6,317,000 for complaints received from 1 January 2024. AFCA's complaint pages still show $5 million and the limits are indexed every three years, so check the lender is an AFCA member before you sign. Source: AFCA indexation notice and Complaints we consider, read 17 September 2026.
- Read the default, extension and review clauses with a solicitor. These clauses decide what happens when sales run slow, which is the scenario a residual stock loan exists for.
For the lender's side of the same conversation, see what a private funder checks before it agrees to a rollover. General information only, not legal or financial advice.
What do residual stock lenders check before approving a loan?
Lenders check that the stock is finished and titled, priced close to recent sales, and backed by a clear sales history and a realistic plan to sell. Files get cut back when the price list sits above the evidence, too many units remain in one building, or approvals or defects are outstanding.
A lender reads a residual stock file as a sales forecast it has to believe. Everything in the pack either supports the forecast or weakens it. Reaching practical completion is the starting point, not the finish line, and what a valuation actually tests is often where a file is won or lost.
What strengthens the file
- Titles registered and occupancy approval in hand
- Pricing close to settled sales in the same project
- A sales and marketing history that shows real enquiry
- A sell-down plan with a realistic pace
- A clean construction payout figure
What weakens or cuts the file
- A price list above the sales evidence
- Many unsold units in one building
- Defects, approvals or titles outstanding
- Buyers who have failed to settle
- No clear plan if sales stay slow
If buyers have failed to settle, read what happens when presales fall over before you apply, because a lender will ask. The same discipline behind what lenders test in a feasibility carries through to the end of the project, when the numbers are real rather than forecast.
What the lender will ask for:
- Occupation or completion certificate
- Registered strata plan or plan of subdivision
- Price list and sales history
- Marketing history and agent appraisals
- The lender's own valuation
- The construction facility payout letter
- Entity financials and guarantor details
Do you need tax returns for a residual stock loan?
Not always, because some specialist lenders offer full doc and lite doc residual stock options, and some private lenders lean more on the completed security, the developer's track record and the sell-down exit. A long-term hold is different: once rent rather than sales is expected to repay the debt, income and serviceability matter much more. Ask the lender which it assesses before you assemble the pack.
How fast can a residual stock loan settle?
There is no reliable market-wide settlement time. Some private lenders advertise very fast turnarounds, but the real timetable depends on the valuation, the titles, the outgoing lender's payout and discharge, the legal documents, funding conditions and any shortfall all lining up. Treat an advertised turnaround as a lender claim, not a deadline to build the project around.
A complete pack moves faster than a partial one, and the lender's valuation is usually the item that sets the pace.
What we see on residual stock files, as of September 2026
On residual stock files, the developers with the most choice are the ones who start before the construction lender's last review date, not after a demand arrives. A price list that sits close to recent sales does more for the loan amount than any argument about value. Where files get cut back, it is most often because too many unsold units sit in one building. Lenders move fastest when titles, occupancy approval and the sales history arrive together in one pack.
General observations from our broking work, not a quote, an offer or an assessment of your application.
Do apartments, townhouses, land lots and commercial units get treated differently?
Yes, lenders value each type of unsold stock differently and set tighter terms where the buyer pool is thinner, such as vacant land lots and commercial or mixed use units.
| Stock type | What the lender values | What usually limits the loan | What the lender wants to see |
|---|---|---|---|
| Apartments in one building | Each lot as it stands, sometimes all remaining lots together | The number of unsold lots in the same building and recent sales in it | Registered strata plan, sales history, price list |
| Townhouses | Each dwelling as it stands | Comparable sales nearby | Titles, occupancy approval, agent appraisals |
| Land lots | Each lot as vacant land | Lower lender appetite for vacant land | Registered plan of subdivision, services connected, lot sales |
| Commercial or mixed use lots | Each lot on a commercial valuation, with use and any lease tested | Vacancy and a smaller buyer pool | Leasing evidence, zoning and permitted use, strata by-laws |
Lender policies differ; this shows the usual pattern, not any lender's rules.
Commercial and mixed use lots are the type most likely to need a different loan altogether, because the lender tests the lease and the use as well as the sale price. Our guide on how commercial property loans work covers what changes when income, not a sale, is expected to repay the debt.
A residual stock loan turns finished, unsold units into time to sell. It is sized on what the stock is worth today after GST, usually carries capitalised or prepaid interest, and costs more than its headline rate once fees and the sell-down period are counted. Non-bank lenders and private credit funds write most of these loans, so checking where the money comes from and what protection applies matters as much as the loan terms.
Key takeaway: a residual stock loan buys time to sell, not a better price, so it works best when the stock is already priced to the market.Frequently Asked Questions
Residual stock means the completed apartments, townhouses or land lots that are still unsold at the end of a development. It is a property term, not a reference to shares or to the residual value on an equipment or vehicle loan. A loan secured over that stock is a residual stock loan.
Often, yes. Take-out loan and stock loan are market terms for finance that takes out the construction lender, and many lenders use them for a residual stock loan. Some use take-out more broadly for any refinance at completion, including a move to long-term investment loans. See what to do when the construction facility expires with unsold stock.
A residual stock loan to a company is usually not regulated consumer credit, because ASIC says loans to companies are not subject to the credit legislation. A loan to an individual is different: ASIC INFO 101 says a loan to a natural person to buy land and build residential dwellings will generally be regulated. Get legal advice on your structure and read how private lending rules apply.
Yes, lenders do write residual stock loans over land lots and commercial or mixed use units, but the terms are usually tighter and fewer lenders take them on. Vacant land and commercial lots have a thinner buyer pool, and commercial lots are tested on their use and any lease. Read how commercial property loans work for the income test.
Generally yes. The ATO says that if you build new residential premises for sale, you are liable for GST on the sale, and the margin scheme can reduce the GST if you are eligible. The buyer generally withholds part of the price and pays it to the ATO at settlement. Get tax advice and read how the margin scheme changes what you can borrow.
Yes. Under section 420A of the Corporations Act, a receiver or other controller selling a company's property must take all reasonable care to sell for not less than market value, or the best price reasonably obtainable if there is no market value. Mortgagees selling land have similar statutory duties in NSW and Queensland. If a default notice has arrived, speak to a solicitor, and read what happens when a senior lender calls in receivers.
Not in the way a bank is. A larger non-bank lender must register with APRA as a registered financial corporation, but APRA says registered financial corporations are not subject to supervisory oversight. Registration is for data collection, and a lender may not advertise that it is registered with APRA.
Only if the lender is an AFCA member, because AFCA can only consider complaints about its members. Small businesses with fewer than 100 employees can complain about credit facilities up to AFCA's monetary limit, which is indexed every three years. Check membership as part of choosing a private lender.
Usually not. APRA's standard APS 112 treats a loan as land acquisition, development and construction lending only while its main security is not fully completed. A loan over finished stock can still be classed as non-standard if the bank cannot show the borrower can meet repayments, which raises the capital it must hold. That helps explain why non-bank lenders fund so much completed stock.
It can, where the unsold stock is worth more than the amount needed to repay the construction facility and the lender agrees to advance the difference. Whether any equity is released depends on the valuation, the lender's loan-to-value limit, how interest is handled and the release prices agreed for each unit. See how developers use unsold units to fund the next site.
Sometimes, but only with the first lender's consent and a priority arrangement between the lenders. Second-ranking money is repaid after the residual stock lender when the stock sells, so it is the most expensive layer in the funding stack. Read how mezzanine debt works before adding a second lender.
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