Home / Property development finance / Residual stock lending
Finished but unsold
The build is done, but not everything has sold, and the construction loan is due. Residual stock lending buys you time to sell at the right price.
By Yatin Kainth, Financial Adviser FSP1007497. Last reviewed
Short answer
Residual stock lending in NZ refinances the construction loan on completed, unsold dwellings, usually at 60 to 75% of their current value, for 6 to 24 months. It stops a forced discount sale to meet the construction lender’s deadline. Interest can often be capitalised, and the loan is repaid as each unit sells.
Maximum residual stock loan
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Shortfall or surplus against construction debt
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Interest over the term
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A shortfall needs to be covered from cash, other equity or a discount on the construction debt. Indicative only.
The lender values each unit, sets a release price for each, and refinances the construction loan. As each unit sells, the release price goes to the lender and the balance comes to you. Ask about early repayment terms, because you want to clear the loan as soon as stock sells.
Completed dwellings that haven’t sold when the construction loan finishes.
Many lenders allow it, and rent can help cover interest. Check the loan terms.
Often within two to four weeks, once valuations are done.
No. It’s used for projects from two townhouses up.
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