Why banks decline residual stock bridging
Construction lenders have fixed payback dates. When the development is complete, they want their money back — regardless of whether every unit has sold. Banks don't want to carry residual stock risk. If some units remain unsold when the loan matures, the developer faces a fire-sale scenario or project failure.
Most residential developers will have 1–5 unsold units in a development of 10–50 apartments. These represent real value — sometimes $2–5 million combined — but the construction lender's calendar doesn't care. The loan is due now.
How private lenders look at this differently
Private lenders understand property development. They know that unsold units in a completed project are valuable security. The key questions are:
- What are the unsold units worth? — This is the primary security. Lenders assess the market price and apply a conservative discount to account for the time needed to sell.
- What's the sales velocity? — How quickly have the sold units moved? This tells the lender how long the remaining units will take to sell.
- How much do you need to borrow? — This determines the loan-to-value ratio. A lower LVR means the lender's risk is smaller even if sales slow down.
Residual stock is a straightforward deal for private lenders. You have a valuable, completed asset and a clear exit — selling the remaining units. Many lenders on our panel have done dozens of these deals and understand the timelines.
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Check Your OptionsWhat a typical deal looks like
Illustrative example — not a real caseImagine a developer who completed a 12-unit apartment building. Ten units have sold at an average price of $1.5 million each. Three units remain on the market, valued at $1.5 million each. The construction loan was $18 million and is due in 30 days. The developer knows the remaining three units will sell — comparable sales in the building are strong — but the timing won't align with the bank's payment date.
A private lender offers a residual stock bridge. They value the three remaining units at $4.5 million combined. They lend at 65% LVR, offering a loan of approximately $2.9 million. This is enough to repay the construction lender. The developer continues marketing the remaining units at fair value. As each unit sells, the proceeds pay down the bridging loan. Within 6–12 months, the unsold stock is sold and the bridge is fully repaid.
What lenders want to see
Private lenders will ask for straightforward information to assess the deal:
- Development details. How many units in total? How many have sold and at what prices? What are the unsold units listed at?
- Marketing evidence. Real estate agent marketing materials or sales data showing the development's appeal and sales pace.
- Current construction loan. How much is owing? What's the maturity date? This tells the lender how urgent the bridge is.
- Exit timeline. When do you realistically expect the remaining units to sell? This shapes the bridge term.
When this might not work
A residual stock bridging deal might not be suitable if:
- The development is in a declining market and unsold units are depreciating. If property values are dropping, lenders will be cautious about LVR and may require a larger haircut.
- There's no clear marketing plan or the remaining units have been on market for a very long time with no offers. This signals the market doesn't want the units at the listed price.
- The construction lender has placed restrictions on the property (like a security interest preventing sale) that would complicate the sale of residual stock.
Our panel includes specialist private lenders who regularly fund residual stock bridging for developers. Across these lenders:
- Settlement in as fast as 1–5 business days — timing is critical when construction loans are due
- Loan sizes from $50K to $80M, supporting developments of any scale
- LVR up to 85% on commercial or residential unsold stock, depending on market conditions and sales evidence
- Coverage across all Australian states and territories
The exact lender and terms depend on your development. Describe your situation and our AI will match you with the most suitable lenders.
How to get residual stock bridging finance
The process is straightforward:
- Step 1: Describe the development. Tell us the project name, total units, sold units and prices, unsold units and values, and when your construction loan is due.
- Step 2: Get matched. Our AI checks your development against specialist lenders on our panel who have residual stock experience and shows you which are most likely to proceed.
- Step 3: Move fast. Most lenders can move quickly on residual stock deals. You'll hear indications within days and settlement can happen in 1–5 business days.