Why non-bank lenders are worth a look for development funding
With the Reserve Bank’s recent OCR cut, and more reductions expected, we’re seeing growing interest from developers looking to get their next projects underway. One of the big shifts happening right now is a renewed appetite for non-bank development funding, and with good reason.
While bank finance can still work for some, many developers find main bank criteria too slow or too rigid for the pace and structure their projects demand. That’s where non-bank lenders often shine.
Key advantages of non-bank funding include:
Faster approvals – often days, not weeks
Higher leverage – typically up to 70% LVR with no pre-sales, and up to 80% with pre-sales
No pre-sale requirements – plus greater flexibility around acceptable exit strategies
Support for builder-developers – more accommodating terms for those acting as both developer and head contractor
Staged drawdowns and capitalised interest options – tailored to match the actual cash flow needs of your project
These features allow developers to stretch their capital further and enhance their return on equity - the metric that matters most.
Importantly, non-bank interest rates are starting to come down as the OCR drops, making funding costs more competitive. But it's not just about the interest rate. Many non-bank lenders advertise sharp rates but include additional line fees. For example, a 0.25% line fee might sound minor - but if it’s charged monthly, that equates to 3% per annum, charged on the total loan facility regardless of drawdowns.
That’s where Colab can help
We work with all major non-bank lenders and the property finance teams at the main banks. We understand the fine print, and we know how to model your facility properly, so you’re comparing the true cost of funding, not just the headline rate.
One recent example
We’re about to settle stage one of a complex townhouse development in Mt Eden. It’s a multi-stage build with no pre-sales in place, a structure the banks wouldn’t touch. The deal involves three staged drawdowns, with the first settling this month. It’s a great example of how a well-structured non-bank solution can unlock a project and get it moving.
Whether you’re looking to:
Minimise your funding cost across multiple drawdowns
Stage a project for better cash flow
Refinance back to a main bank post-completion
We’ll help structure the right solution to get it done.
Non-bank funding isn’t just for those who “can’t go bank.”
In today’s market, it’s often a strategic advantage - helping you move faster, stay flexible, and seize opportunities while others are still waiting on consent.
If you’ve got a project on the go, or just want to run an idea past us, we’d love to chat.