Most property developers meet their first development finance broker at the worst possible time, when a bank has already said no and the settlement clock is running. By then the choice of broker is being made under pressure, on a referral, with little time to check whether the person actually has the lender panel the project needs. That is a costly way to pick one of the most important counterparties in a raise.
A development finance broker sits between you and a lending market that has changed shape. The major banks have stepped back from speculative multi-unit development, non-bank specialists and private credit funds have filled much of the gap, and the panel of who will actually fund a given project is now fragmented and hard to map from the outside. A good broker knows that map. A weak or conflicted one can cost you months, a worse structure, and a fee you did not need to pay.
This guide is written for the developer doing the choosing. It covers what a development finance broker actually does, how a specialist differs from a mortgage broker, who sits on the lender panel now, how brokers get paid and where that creates a conflict, the protections you do and do not have when the loan is for business purposes, and a practical checklist for vetting one before you sign anything.
What a development finance broker actually does
At the simplest level, a development finance broker arranges the debt that funds a project, then manages that debt from term sheet through to the final construction drawdown. The work is less about “finding a loan” and more about packaging a project so the right funder will back it on terms that keep the feasibility intact.
A capable broker works through roughly five stages. First, they triage the deal: they read the feasibility, the gross realisable value (GRV), the presale position and the gearing, and form a view on whether it funds at all and at what loan to cost ratio (LTC). Second, they structure and package the file so it reads the way a credit team reads it, fixing weak points before submission rather than after a decline. Third, they place the file across a panel of funders whose appetite they already understand, which creates competitive tension on price and terms. Fourth, they manage the formal application through valuation, quantity surveyor (QS) review, credit approval and legal documentation. Fifth, they stay involved through construction, where progress drawdowns, cost-to-complete checks and variations all run through the facility.
The value sits mostly in stages one to three. A developer going direct to a single lender is, in effect, comparing one quote against nothing. A broker placing the same file across several funders turns that single quote into a market. That is the honest core of the broker proposition, and it is genuine: with bank appetite patchy and private credit fragmented, the cost of approaching the wrong funder first is real.
It is worth being clear about what a broker is not. A broker is not a lender and does not approve or fund anything. A broker is not a financial adviser and is not, on a development facility, acting under a legal duty to put your interests first (more on that below). And a broker is not a substitute for your own feasibility discipline. The numbers you hand over are the numbers the whole raise is built on.
Development finance broker, mortgage broker or commercial broker
The three terms get used loosely, and the differences matter because they tell you whether the person in front of you has done your type of deal before.
A mortgage broker, in the strict sense, arranges home loans for consumers. Their panel is built around the major banks and mainstream lenders, their work is dominated by residential lending, and, importantly, their conduct on those loans is regulated under a best interests duty (more below). Many mortgage brokers are excellent at what they do, but a 12-month interest-only construction facility for a six-townhouse project, secured against a special purpose vehicle (SPV) and conditional on presales, is a different animal from a residential home loan. Some mortgage brokers dabble in it; far fewer do it well.
A commercial finance broker covers a broader range of business lending: commercial property, business loans, equipment and asset finance, and sometimes development. The breadth is useful, but breadth is not the same as depth. A generalist commercial broker may place a straightforward owner-occupier commercial property loan competently and still be out of their depth on a staged construction facility with a cost-to-complete test and a residual stock exit.
A specialist development finance broker concentrates on construction and development debt. They are fluent in feasibility models, presale coverage, LTC and loan to value ratio (LVR) benchmarks, QS reports, progress claims and the difference between a senior facility and the layers that may sit behind it. Crucially, their lender panel reaches the non-bank and private funders that now write much of Australia’s development debt, not just the banks. For anything beyond the simplest dual-occupancy build, this is usually the broker you want.
A simple way to test which one you are talking to is to ask about deals, not credentials. How many development facilities have they settled in the last year? What sizes? What funder types? A specialist will answer in specifics. A generalist will answer in generalities.
| Mortgage broker | Commercial finance broker | Development finance specialist | |
|---|---|---|---|
| Typical work | Residential home loans | Business, commercial property, asset finance | Construction and development debt |
| Core panel | Major banks, mainstream lenders | Banks plus some non-banks | Banks, non-banks, private credit, family offices |
| Reads feasibility models | Rarely | Sometimes | Routinely |
| Best interests duty applies | Yes, on consumer loans | No, on commercial credit | No, on development credit |
| Best fit for | A home or simple investment loan | A straightforward commercial property loan | A staged build with presales and a QS report |
The “best interests duty applies” row is the one most developers overlook, and it is the subject of a later section. The short version is that the legal duty constraining a mortgage broker on your home loan does not follow you onto your development facility.
Who actually funds development now, and why the panel matters
The reason a broker’s panel is so central is that the funding market has split into layers, and no single funder covers them all.
The major banks remain active in development lending, but their appetite has tightened, particularly for speculative multi-unit projects without strong presales. Bank lending standards are shaped by prudential requirements overseen by the Australian Prudential Regulation Authority (APRA), and those standards flow through to presale requirements, gearing ceilings and the level of pre-commitment a bank wants before it funds. For a developer, a bank facility is typically the cheapest senior debt available, but also the hardest to qualify for and the slowest to approve.
Below the banks sit the non-bank and second-tier specialist lenders. These funders price higher than banks but offer more flexible presale and gearing terms, and they have taken a large share of the development market as banks have retreated. The Property Council of Australia and other industry bodies have tracked how much of the active development capital now sits outside the major banks. For many mid-tier projects, a non-bank senior facility is the realistic base case rather than the fallback. The private lenders guide covers this segment in depth.
Further out again sit private credit funds, mortgage funds, family offices and high-net-worth syndicates. These provide the most flexible and fastest capital, at the highest cost, and they are the least visible from the outside. A developer cannot easily find or compare them; a broker who works this part of the market can. Where the senior facility leaves a gap, a second layer of capital such as mezzanine finance or preferred equity may sit behind it, and reaching those funders is again a panel question. The equity partners and preferred equity guide covers the capital that sits below the debt.
The practical point is that lender appetite is specific and it moves. A presale requirement of roughly 30 to 50 per cent of debt, or an LTC ceiling around 65 to 75 per cent, can be a flat no at one funder and a clean yes at the next, and those settings shift with the cash rate and with each lender’s book at the time. The Reserve Bank of Australia (RBA) cash rate feeds senior pricing, which drags the whole stack. A broker’s core value is knowing, in the current month, which funder will look favourably on your particular project, rather than submitting blind and learning the answer through declines. The mechanics of the senior facility itself are covered in the construction finance guide.
How development finance brokers get paid
This is the part developers most often skip, and it is where the broker’s incentives and yours can quietly diverge. There are two main ways a development finance broker is remunerated, and many brokers use a combination.
The first is lender commission. When the broker places your facility with a funder, that funder may pay the broker an upfront commission, typically calculated as a percentage of the loan or facility limit, and sometimes a smaller ongoing or trailing commission while the facility runs. On residential lending these commissions are broadly standardised across lenders, but on development and commercial facilities they are negotiated and can vary materially between funders. That variation is the source of the conflict: a broker paid more by Funder A than Funder B has a financial reason, conscious or not, to lean towards Funder A.
The second is a broker fee charged directly to you, the developer, for arranging and managing the facility. On development deals this is common, and it may typically range from around 0.5 to 2 per cent of the total debt facility, sometimes structured as a success fee payable only on settlement, sometimes part-payable upfront. On a larger or more complex raise the fee may be higher; on a simple facility a broker may rely on lender commission alone and charge you nothing. Some brokers charge you a fee and also receive lender commission, which is permissible but should be disclosed in full.
To make the numbers concrete, consider a project with a $6 million senior debt facility. A broker fee of 1 per cent is $60,000, and the lender might pay the broker a further upfront commission of, say, 0.4 to 0.6 per cent on top, another $24,000 to $36,000. Whether that combined cost is good value depends entirely on the alternative. If the broker’s access secures a facility that is half a per cent cheaper on rate, or that needs 10 per cent less in presales, the saving over an 18-month build can dwarf the fee. If the broker simply forwards your file to one funder you could have approached yourself, it does not. The fee is not the question. The value relative to the fee is.
None of this is improper in itself. A broker doing genuine work on a hard-to-place project earns their fee, and a developer who saves months and secures a better structure is usually well ahead even after paying it. The problem is non-disclosure and misalignment. Before you engage a broker, ask three questions in writing: what will you charge me, what will the lender pay you, and does that payment vary depending on which lender you place me with. A broker who answers those clearly is one you can work with. A broker who is evasive is telling you something.
It is also worth understanding why this differs so sharply from a home loan. On residential lending, both the standardisation of commissions and the best interests duty constrain how a broker can let remuneration drive their recommendation. On development finance, as the next section explains, neither of those guardrails applies in the same way. That makes the fee conversation your responsibility, not the law’s.
The protection gap: why broker choice carries more weight in development finance
This is the single most important section of this guide, and it is the part the rest of the search results almost entirely ignore. When you borrow to develop, you are usually outside the consumer protection regime that covers home borrowers, which means the legal safety net is thinner and the burden of diligence shifts onto you.
The relevant law is the National Consumer Credit Protection Act 2009 (NCCP Act) and the National Credit Code (NCC) inside it. The Code regulates credit provided to individuals for personal, domestic or household purposes, and for residential property investment. It does not apply where credit is provided wholly or predominantly for business or investment purposes other than residential property investment. The exclusion is set out in the National Credit Code, and in practice almost all development finance, a facility advanced to a company or SPV to build for profit, falls on the business-purpose side of that line. Lenders commonly reinforce this with a business purpose declaration from the borrower, the mechanics of which sit in the National Consumer Credit Protection Regulations.
Three consequences follow, and each one raises the stakes on who you choose as a broker.
First, the best interests duty does not apply to your development facility. Since 1 January 2021, mortgage brokers have been bound by a best interests duty when they provide credit assistance to consumers, explained by the Australian Securities and Investments Commission (ASIC) in Regulatory Guide 273. That duty requires the broker to act in the consumer’s best interests and to prioritise those interests over their own, including investigating lower-cost options. It applies to consumer credit and residential lending. It does not extend to commercial or development finance. On your project facility, the broker is generally free to place you with the funder that suits them, subject only to general law and contract. The protection you might assume exists, because it exists on your home loan, is not there.
Second, a broker or lender dealing only in business-purpose credit may not be required to hold an Australian Credit Licence (ACL) at all. Holding a licence, or being a credit representative of a licensee, is tied to engaging in “credit activities” under the consumer credit regime. As ASIC notes in its guidance on commercial loan disputes, lenders that only provide commercial loans are not required to hold a credit licence and are not legally required to belong to the external dispute scheme. Many reputable development brokers do hold a licence or operate as a credit representative, often because they also write residential business and because aggregator panels require it, but it is not guaranteed. You should check rather than assume.
Third, your avenues if something goes wrong are narrower. The same ASIC guidance is blunt about it: the law provides the lowest level of protection to commercial loans, and that limits the regulator’s ability to act. Courts set a high bar for arguments such as unconscionable conduct in commercial lending, interpreting the transaction on the basis that commercial parties can generally look after their own interests. There are some general protections, including the unfair contract terms regime for small business standard-form contracts, but they are far weaker than the consumer regime. And the consequences of default on a development facility, including the appointment of a receiver over the security, are covered by the harder edges of insolvency and receivership law rather than consumer hardship protections.
External dispute resolution exists but is limited. The Australian Financial Complaints Authority (AFCA) can consider complaints from a small business, defined in its rules as a business with fewer than 100 employees, about commercial lending, including the conduct of a broker. The way AFCA assesses these matters is set out in its published approach to lending to small business. But AFCA generally cannot consider a complaint where the small business credit facility exceeds around $5 million, and it can only deal with firms that are AFCA members. A larger development facility, or a facility from a lender that has not voluntarily joined the scheme, may fall outside AFCA entirely, leaving the courts as the only path. The takeaway is not that development finance is dangerous, it is that the guardrails you take for granted as a consumer are mostly absent. The quality and integrity of your broker is doing the work that the law does on a home loan.
How to choose a development finance broker
Given that the legal safety net is thin, the vetting you do up front is the protection. The following checklist is what an experienced developer tends to work through before signing a mandate.
Licensing and registration
Check whether the broker holds an Australian Credit Licence or is an authorised credit representative of a licensee. You can verify a licence or credit representative number on the ASIC professional registers, and you can read about what the licence requires on ASIC’s credit licensee pages. A licence is not legally mandatory for purely commercial work, but its presence tells you the broker meets baseline conduct, training and dispute-resolution standards, and that there is somewhere to take a complaint. Its absence is not automatically disqualifying, but it should prompt more questions, not fewer.
Industry body membership
Most credible brokers belong to one of the two industry bodies, the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA). Both impose codes of conduct, continuing professional development and membership standards, and both have complaint mechanisms. Membership is a useful baseline signal, though it is exactly that, a baseline, not a guarantee of development expertise.
Development-specific track record
This is the filter that matters most. Ask for recent development facilities the broker has settled, by project type, size and funder. A broker who routinely places six-townhouse projects with non-bank lenders is a different proposition from one who has done two small construction loans alongside a residential book. Match their experience to your project. A broker strong on small residential builds may be the wrong choice for a $30 million apartment raise needing private senior debt, and vice versa.
Panel breadth and relevance
A broker is only as useful as the funders they can reach. Ask how many lenders sit on their panel, and more importantly which types: major banks, non-bank specialists, private credit and family offices. Then check the panel actually includes the funder type your project needs. If your deal realistically funds through private credit, a broker whose panel is bank-heavy will struggle regardless of their other strengths.
Transparency on remuneration and conflicts
Ask the three questions from the fee section in writing, and read the answers. The government’s Moneysmart guidance on using a broker is framed for home loans, but the questions it suggests, about commissions, fees and how a broker is paid, translate directly to a development engagement, where you have to ask them yourself because no duty asks them for you. A broker willing to put their fee, their lender commissions, and any variation between lenders in a written engagement letter is showing you they are comfortable being measured. Reluctance here is the clearest red flag in the whole process.
References and capacity
Ask to speak to two or three developers the broker has acted for, ideally on projects like yours, and ask those developers about responsiveness during construction, not just at settlement. A development facility runs for the life of the build, and a broker who disappears after the upfront commission is paid is a problem you only discover at the first drawdown dispute. Confirm the broker has the capacity to manage your file through to the final claim.
Red flags to weigh
Several patterns warrant caution: large upfront fees payable before any deliverable, pressure to sign an exclusive mandate before the broker has seen your numbers, vague or shifting answers on remuneration, a panel that does not include the funder type your deal needs, promises of approval before a lender has assessed the file, and an unwillingness to provide references. None of these is automatically fatal, but each one is a reason to slow down.
What a broker needs from you
The quality of the outcome depends heavily on the quality of the file you hand over. A complete, credible package lets the broker create genuine competitive tension; a thin one invites caution and worse pricing. Before you engage, assemble the following.
A robust feasibility model is the foundation. Funders will want to see total development cost (TDC), gross realisable value, projected profit and margin, and the project cashflow, with assumptions you can defend. This is also where modelling tools earn their place. Feasly’s feasibility platform is built for exactly this stage, letting you model the full capital stack and run sensitivity analysis across interest rates, costs and sale prices, so the numbers you give a broker are stress-tested rather than optimistic. The deeper mechanics of feasibility are covered in the property development feasibility guide.
Beyond the model, lenders typically expect evidence of presales where the project relies on them, a quantity surveyor report or cost plan supporting the construction budget, the planning approval status including any development application (DA) or permit conditions, and a capability statement setting out your track record and the project team. The more of this you can present cleanly at the outset, the stronger your position. A broker who has to chase missing pieces loses momentum and pricing tension with it.
How the engagement runs, step by step
A typical development finance engagement moves through a recognisable sequence, though timeframes vary with project size, funder type and market conditions.
It usually begins with a discovery and feasibility review, where the broker pressure-tests the numbers and forms a view on fundability. From there the broker sounds out the panel and returns with indicative terms or term sheets from funders likely to back the deal, which is where you see the competitive tension in action. You and the broker then select a preferred funder, balancing price, gearing, presale terms and speed rather than rate alone. The formal application follows, supported by valuation and the quantity surveyor review, and moves to credit approval, usually with conditions attached. Legal documentation and security registration come next, then settlement of the facility. Through construction, the broker helps manage progress drawdowns against the cost-to-complete schedule, and at the end the facility is repaid from sales or refinanced, for example into a residual stock facility where completed stock is held rather than sold immediately.
As a rough guide, a straightforward non-bank facility may move from engagement to settlement in a matter of weeks, while a bank facility or a complex private raise can take considerably longer. A good broker will give you a realistic timeline at the outset and flag the steps most likely to slow it down, usually valuation and presale verification.
State and territory considerations
Broker conduct and credit licensing are governed by federal law, so the regulatory position is consistent across New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory. The best interests duty, the licensing regime and the AFCA scheme operate nationally, and the business-purpose exclusion that takes development finance outside the consumer regime applies the same way everywhere.
What does vary by jurisdiction is the depth and shape of the lending market. New South Wales and Victoria have the deepest pools of both bank and non-bank development capital, with Queensland generally next. In South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory, the funder pool tends to be thinner, and developers may find themselves relying more heavily on non-bank and private lenders, and on brokers who specifically maintain relationships in those markets. A broker whose panel is built around the eastern-seaboard capitals may add less value on a Perth or Hobart project than one with funders active there.
The other state-based layer is the mechanics of security and settlement. Mortgages are registered through each state and territory’s land titles system, and settlement is handled electronically through the national platform used in most jurisdictions, but conveyancing practice, duty and timing differ at the margins. These differences sit mostly with your lawyer and the lender rather than the broker, but they affect the settlement timeline a broker is managing towards.
Common mistakes developers make
A handful of errors recur often enough to be worth naming directly.
The most common is chasing the lowest headline rate rather than the right structure. A facility that is slightly cheaper but demands higher presales, lower gearing or a faster sell-down can be far worse for your actual return than a marginally dearer one that fits the project. The rate is one line in the feasibility, not the whole of it.
The second is signing an exclusive mandate too early. Some brokers ask for exclusivity before they have seen your numbers or shown you their panel. There is little reason to grant it up front. Let the broker demonstrate their access and their thinking first.
The third is failing to confirm the panel actually reaches the funder type you need. A developer whose project realistically funds through private credit gains nothing from a broker with a bank-heavy panel, however capable that broker is on bank deals.
The fourth is paying meaningful upfront fees with no defined deliverable. Fees tied to a clear outcome, such as a settled facility, align the broker with you. Large fees payable regardless of result do not.
The fifth is single-broker tunnel vision. Just as a single lender is one quote rather than a market, a single broker is one view of the market. For a significant raise, it can be worth speaking to two specialists before committing, precisely because their panels and relationships differ.
Where the broker sits in the wider raise
A development finance broker is usually arranging the senior debt, which is the largest single piece of the capital stack but rarely the whole of it. Where the senior facility leaves a shortfall against total development cost, the gap is filled by some combination of mezzanine debt, preferred equity or additional sponsor equity, and the cost of those layers compounds quickly. The decision about how much debt to take and how to fill the rest is a feasibility decision, not a broker decision, and it should be modelled on an all-in basis rather than layer by layer. Running the full stack, with the broker’s likely fee and the lender’s all-in cost built in, before you commit, is what keeps a tight project from being eroded by its own funding. The construction finance guide and the equity partners guide cover the layers around the senior debt.
Key takeaways
A development finance broker can turn a single lender’s quote into a competitive market, reach the non-bank and private funders that now write much of Australia’s development debt, and package a project so it lands with the funder most likely to back it. That access is genuine and, in the current market, often decisive.
But development finance sits outside the consumer credit regime. The best interests duty does not apply, licensing may not be mandatory, and your dispute options are limited. The protections you rely on as a home borrower are largely absent, which means the diligence you do before engaging a broker is the protection. Check the licence, check the industry membership, check the development track record and the panel, and get the remuneration in writing. Hand over a feasibility you can defend, and judge the recommendation on structure and fit, not on the headline rate. The right broker is worth far more than they cost. The wrong one is expensive in ways that do not show up until the first drawdown.
This guide is general information for property developers and does not constitute financial, credit or legal advice. Lending terms, rates, regulatory thresholds and dispute-resolution limits change over time and depend on your circumstances. Confirm the current position with a licensed professional before acting.