Total development cost (TDC) and loan to cost
Total development cost is everything a project costs to complete and sell: land and acquisition, construction and contingency, professional fees, authority contributions, finance costs, selling costs and GST. Loan to cost is the debt as a percentage of it.
Total development cost, explained.
Lenders test the margin on total development cost, commonly looking for 15% to 25% depending on the project, and they fund a percentage of the cost, with the developer's equity making up the rest. Their own quantity surveyor and valuer set the numbers they rely on.
Finance costs are part of the cost, which makes the calculation circular: more debt means more interest means more cost. A feasibility handles that by estimating interest on the average drawn balance over the term.
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The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
