Releasing equity to fund the next site.

Q: How much equity can I actually release from completed stock?

There is no general answer before a valuation basis is agreed, and any figure quoted earlier should be treated with caution. What can be advanced depends on the basis applied to unsold stock, the depth of the market for that product, how much has already sold, serviceability through the hold period, and the position of any incumbent lender.

Q: What happens to my facility as dwellings settle?

Typically each settlement triggers a partial discharge, where an agreed amount of the proceeds reduces the facility so the security can be released. Set aggressively, early settlements strip out the cash you were relying on for the next site; set too loosely, the loan sits above what the shrinking security base supports.

Q: Can released equity fund the deposit and equity contribution on the next site?

It often can, and that is the usual purpose. The lender funding the new site will want to know where the contribution came from and whether it is itself borrowed, so presenting the release openly with the sell-down model attached is stronger than letting it emerge in due diligence.

How much capital completed stock can actually release, how sell-down proceeds interact with facility reduction, and the risk of gearing two projects at once.

Equity release from completed stock

The project is finished. Your capital is still inside it.

Practical completion changes what you own. Until occupancy certificates and titles issue you hold a construction risk; afterwards you hold real estate — finished, individually saleable dwellings. That change in character is what makes an equity release possible at all. It is also where most developers lose momentum, because the next site is being negotiated while the last one is still selling down.

This page is about redeploying capital, not about whether to hold or sell. If the question is how long to keep completed dwellings on balance sheet, the residual stock discussion and our residual stock decision tool deal with that. Here the question is narrower and harder: how much of the equity sitting in completed stock can realistically be moved into the next acquisition, and what happens to both projects if the sell-down runs slower than the settlement calendar.

Siare arranges and structures this finance for business and investment purposes. Our principal has assessed development credit inside a bank, managed a private credit fund, developed property and broked the debt — so you get the answer a credit team would give, before you commit to a site. Figures below come from named past transactions and are historical examples only.

What this actually means

What a lender is genuinely lending against.

Developers often assume released equity is the gap between finished value and construction debt. Credit does not see it that way — four adjustments usually sit between the two numbers.

Valuation basis

Gross realisation is not the security value

A completed project can be valued on several bases: individual retail values, a value assuming an orderly sell-down, or an "in one line" value assuming a single bulk purchaser. Lenders assessing unsold stock frequently reach for the more conservative basis, because that is what they would recover if they had to act. That gap is where an expected release quietly disappears.

Cost to hold

Selling costs and holding costs come off first

Agent commission, marketing, legal and settlement costs, rates, strata levies, insurance and interest during the sell-down all sit ahead of your equity. A careful assessment nets them out before deciding what can be advanced. Get your own accounting and tax advice on how GST and margin scheme treatment affect net proceeds — that is not our advice to give.

Amortisation

The facility is designed to shrink

Facilities secured by completed stock are usually structured to reduce as dwellings settle, through partial discharge amounts applied per sale. That is the point of them. It also means the equity you release is not permanent working capital — it is capital borrowed against an asset base that is deliberately being sold out from under the loan.

Concentration

Two projects, one balance sheet

Once released funds go into a new site, the lender on either side is looking at your total exposure, not one deal. Security structures, guarantees, cross-collateralisation and priority arrangements between facilities become the real negotiation. This is where an ordinary broker and a bank branch typically stop, and where development finance advisory starts.

The sequence

Sequencing a release against the next settlement.

Order matters more than speed. Most releases that fail were attempted in the wrong order — usually because a site contract was signed before anyone tested what the completed project would support.

Establish the true present value of the completed stock

Not the feasibility number from two years ago. Current comparable settled sales for the exact product type, the stock actually remaining, and an honest read on absorption in that submarket. Assumptions that cannot survive a sceptical reading will not survive a lender's valuer.

Net the release down before you rely on it

Take the assessed security value, deduct existing debt, then selling and holding costs to the end of a realistic sell-down, then the lender's own buffer. What remains is the number to plan around — our development finance calculator is a starting frame for that arithmetic.

Model the sell-down against the amortisation profile

Map each expected settlement against the partial discharge that will apply to it, then re-run it with sales landing later than forecast. If a two-month slippage breaks the facility, you have found the problem before your lender does.

Match the release to the next site's contract terms

Deposit, due diligence period, settlement date and any extension mechanism should be negotiated with the funding sequence in mind, not the other way round. Where settlement sits ahead of the release, a bridge may be the honest answer rather than a workaround.

Stress the position across both projects at once

Test rate movement, a slower sell-down, a cost variation on the new site and a valuation under expectation together, not one at a time. Over-gearing rarely comes from a single bad assumption — it comes from two reasonable ones slipping in the same quarter.

Decide the structure, then approach the market

Whether the release sits with the incumbent lender, a new financier, a second mortgage behind the existing first, or a combination, is a structuring decision. A half-formed proposal shopped to several lenders at once damages your credibility with all of them.

Evidence

What makes a release properly assessable.

A credit team can only lend against what it can verify. Assembling this before the approach is the largest controllable factor in the outcome.

The completed project

Occupancy or completion certificate and final building surveyor sign-off

Evidence of titles issued, or the plan of subdivision status and lodgement date

Final cost report against the original budget, with variations explained

Practical completion documentation, defects schedule and rectification status

The remaining stock

Schedule of every lot: sold and settled, sold and unsettled, unsold

Executed contracts, deposits held and expected settlement dates

Agent appointment, marketing program and written feedback on enquiry levels

Comparable settled sales in the building and in the immediate area

The next site

Contract of sale with all special conditions and the settlement date

Planning status: approval, application lodged, or pre-lodgement only

Feasibility with sourced cost inputs, not indexed guesses

Builder engagement status and any early works or contract sum advice

The borrowing entity

Group structure diagram showing every entity and where security sits

Current financial statements and a consolidated position across both projects

Existing facility schedules, covenants and any priority deeds already in place

Serviceability position through the sell-down period, not just at day one

This is general information about how development and commercial finance is assessed. It is not tax, legal, accounting or conveyancing advice, and it is not personal financial advice. Obtain your own professional advice before acting. Finance discussed on this page is for business and investment purposes.

Questions

What developers ask before they redeploy.

How much equity can I actually release from completed stock?

There is no general answer, and any figure quoted before a valuation basis is agreed should be treated with suspicion. What can be advanced depends on the basis applied to unsold stock, the depth of the market for that product, how much has already sold, your serviceability through the hold period, and the position of any incumbent lender. The useful early exercise is establishing which valuation basis a lender will use — the same asset can support materially different outcomes depending on that one decision.

What happens to my facility as dwellings settle?

Typically each settlement triggers a partial discharge: an agreed amount of the proceeds reduces the facility so the security can be released. Set aggressively, early settlements strip out the cash you were relying on for the next site. Set too loosely, the loan sits above what the shrinking security base supports. Negotiating that schedule, and any minimum release price per lot, is often worth more than arguing about margin.

Can released equity fund the deposit and equity contribution on the next site?

It often can, and that is the usual purpose. The complication is that the lender funding the new site will want to know where the contribution came from and whether it is itself borrowed. Presenting the release openly, with the sell-down model attached, is far stronger than letting it emerge in due diligence. Where the two lenders differ, a deed of priority or an agreed second mortgage position may be needed — our interstate second mortgage case study shows that pre-solved on a live file.

How is this different from a residual stock loan?

A residual stock facility is the instrument; equity release is what you do with it. The residual stock question is whether to keep holding completed dwellings or discount to clear. This question assumes you are comfortable holding for a defined period, and asks how much of that value can safely be put to work on the next acquisition. Same facility, entirely different stress testing — holding stock is one risk, holding stock while carrying a second site is another.

What is the real risk of doing this?

Over-gearing across two projects at the same point in the cycle. A slower sell-down on the completed project and a delayed approval on the new site are correlated — both track the same market and the same authority environment. If the model only survives when one of them goes wrong, the position is thinner than it looks. Better to have that conversation before the site contract is signed than after.

Proof

Three files where the structure did the work.

Each is one completed transaction, described as a historical record of process and decision-making. None is an offer, a benchmark, or an indication of what may be available on any other file.

More completed files, including the release of trapped construction funds at Newport, are on our track record page.

Residual stock

A $12.6M facility on a Mosman trophy asset

The pricing offered was not the pricing settled. Working directly with the lender's credit and client-partnerships teams, the rate on this facility was argued down from 9.00% to 7.99% on the evidence of the asset and the sponsor. One past transaction; pricing on any file depends on its own facts.

Read the file →

Completion to next move

A duplex delivered five months early

Hands-on progress-claim management brought the build in ahead of program. At completion the two dwellings took different paths: one sold at auction, one refinanced onto a residual stock facility — the equity release decision made lot by lot rather than project-wide.

Read the file →

Timing

An $800,000 bridge on an approved Moama site

The site could not wait for a gross realisation valuation to be instructed and returned. A six-month bridge was secured on an evidenced package instead, holding the acquisition while longer-dated funding was arranged. A historical example of sequencing, not a statement of terms.

Read the file →

Next step

Bring us the completed project and the site you are chasing.

Send the stock schedule, the existing facility terms and the contract on the next site. We will tell you what the position genuinely supports, where the structure is thin, and whether the release is worth pursuing at all — including when the answer is to sell down further first.

Siare arranges and structures development and commercial property finance. As a La Trobe Financial Preferred Platinum Partner we have direct senior BDM and credit access when a file needs to be argued rather than submitted.

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All finance is subject to lender assessment, valuation, credit criteria and documentation. Nothing on this page is an offer of credit or a promise of an outcome, availability or timeframe. For business and investment purposes only. Seek your own tax, legal and accounting advice.