Construction Peak Debt Calculator
Peak debt on a construction facility depends entirely on when money goes out and when equity goes in. This tool builds a month-by-month cash flow across the build, applies interest on the average monthly balance, and shows the peak exposure, LVR against GRV and the resulting project margin.
Step 1 of 5
Construction Peak DebtProject costs
Total development cost, split so the draw profile can be applied to construction only.
Drawn in full at the start of the project.
Build cost, distributed across the build using the draw profile.
Consultants, council contributions, contingency and holding costs.
How this was calculated
Every figure below shows the method used to derive it, so you can check the structure before taking it to a client.
Project cost
| Land cost | $1,200,000 |
|---|---|
| Construction cost | $2,800,000 |
| Other project costsConsultants, council, contingency | $400,000 |
| Total project cost | $4,400,000 |
| Establishment feeCapitalised1.5% of gross facility | $66,000 |
| Interest over the buildAverage-balance method, capitalised monthly | $184,703 |
| Total cost including finance | $4,650,703 |
Funding and equity
Equity is contributed upfront at settlement. Construction costs follow the selected draw profile.
| Total project cost | $4,400,000 |
|---|---|
| Equity contribution | −$1,200,000 |
| Peak debt | $3,450,703 |
| Debt at practical completion | $3,450,703 |
Feasibility on completion
| Gross realisation value | $6,200,000 |
|---|---|
| Selling costs3% of GRV | −$186,000 |
| Net realisation | $6,014,000 |
| Debt at completion | −$3,450,703 |
| Residual after debt repayment | $2,563,297 |
| Total cost including finance | −$4,650,703 |
| Project profit | $1,363,297 |
| Profit on cost | 29.31% |
Monthly interest methodology
Each month: opening debt plus funded costs and other draws, less any proceeds, gives the pre-interest closing balance. Interest is charged on the average of the opening and pre-interest closing balance, so the current month's interest is never included in the balance used to calculate that same month's interest.
| Average balance(opening debt + pre-interest closing) ÷ 2 | Per month |
|---|---|
| Monthly interestAverage balance × 9.25% ÷ 12 | Per month |
| Closing debtPre-interest closing + interest + capitalised charges | Per month |
| Peak debtMaximum monthly closing debt | $3,450,703 |
Monthly cash flow
Interest is applied to the average of the opening and pre-interest closing balance each month, so the current month's interest is never charged on itself.
Debt balance across the build
| Month | Opening | Funded costs | Other draws | Proceeds | Avg balance | Interest | Closing |
|---|---|---|---|---|---|---|---|
| 1 | $0 | $15,383 | $66,000 | — | $40,692 | $314 | $81,697 |
| 2 | $81,697 | $77,938 | — | — | $120,666 | $930 | $160,564 |
| 3 | $160,564 | $159,343 | — | — | $240,236 | $1,852 | $321,759 |
| 4 | $321,759 | $244,148 | — | — | $443,833 | $3,421 | $569,328 |
| 5 | $569,328 | $319,917 | — | — | $729,286 | $5,622 | $894,867 |
| 6 | $894,867 | $376,533 | — | — | $1,083,133 | $8,349 | $1,279,748 |
| 7 | $1,279,748 | $406,739 | — | — | $1,483,118 | $11,432 | $1,697,920 |
| 8 | $1,697,920 | $406,739 | — | — | $1,901,289 | $14,656 | $2,119,315 |
| 9 | $2,119,315 | $376,533 | — | — | $2,307,581 | $17,788 | $2,513,635 |
| 10 | $2,513,635 | $319,917 | — | — | $2,673,594 | $20,609 | $2,854,161 |
| 11 | $2,854,161 | $244,148 | — | — | $2,976,235 | $22,942 | $3,121,251 |
| 12 | $3,121,251 | $159,343 | — | — | $3,200,922 | $24,674 | $3,305,267 |
Assumptions
- Monthly interest methodology
- For each month: opening debt plus funded project costs plus other funded draws less any sale, refinance or debt-reduction proceeds gives the pre-interest closing balance. Interest is then charged on the average of the opening balance and the pre-interest closing balance, at the annual rate divided by twelve. Closing debt is the pre-interest balance plus that interest plus any capitalised monthly finance charges. The current month's interest is never included in the balance used to calculate that same month's interest, so the calculation is fully deterministic with no circular solve.
- Peak debt
- Peak debt is the highest monthly closing debt balance across the build period.
- Sale and refinance proceeds
- Sale and refinance proceeds reduce debt first, before any distribution to equity.
- Draw timing
- Land and other project costs are drawn at the start of month one. Construction costs are distributed across the build using the selected draw profile. Custom percentages are normalised to total 100%.
- Fee treatment
- Deducted fees are financed within the gross facility and taken at settlement, reducing net proceeds. Capitalised fees are funded within the facility rather than paid externally, increasing financed exposure. Separate fees are paid by the borrower outside the facility and do not reduce net proceeds, but do increase total transaction cost.
- GST
- Where GST is marked as applicable on a fee, it is added at 10% on top of the calculated amount.
- Rounding and precision
- All arithmetic uses decimal precision rather than floating point. Figures are rounded to the cent for presentation only, so totals always reconcile.
Important information
This calculator produces an indicative desktop estimate for broker scenario-modelling purposes only. It is not an offer of finance, a pre-approval, a term sheet, or credit assistance, and it does not take your client's objectives, financial situation or needs into account.
This is an indicative desktop cash flow, not a quantity surveyor's report or a lender's feasibility assessment. Real construction facilities are governed by a QS-certified drawdown schedule, cost-to-complete testing, retentions and progress inspections that will change the actual interest cost and peak debt.
Construction lending is assessed on total development cost, gross realisation value, presales, builder capability and contract type. A favourable peak debt figure here does not indicate credit approval.
Actual terms, fees, rates, valuations, and available leverage are determined by the lender following full assessment, valuation and legal review. Fees and interest vary between lenders and transactions. Figures shown depend entirely on the inputs and assumptions you have selected.
Get Solutions does not provide financial, legal, tax, or accounting advice. Your client should obtain independent professional advice before acting on any figure produced here.
Tool version 1.0.0 · Formula version 1.0.0 · Disclosure version 1.0.0 · Calculated 11 Sept 2026, 8:50 pm
Common questions
- How is monthly interest calculated?
- Interest is charged on the average of the opening balance and the pre-interest closing balance for each month, at the annual rate divided by twelve. This average-balance method reflects that drawdowns occur through the month rather than all on day one, and it avoids a circular calculation where a month's interest would feed into its own interest base.
- Why does equity timing change peak debt so much?
- Equity applied upfront funds the early costs, so the facility draws later and less interest accrues. Equity held to completion means debt funds the entire build and compounds for the full term. On a fourteen-month build the difference in total interest is frequently six figures.
- Which draw profile should I use?
- The S-curve is the most realistic shape for a typical residential build: slow start while the site is established, peak through the main structural period, then a taper during fit-out. Use even for a rough first pass, or custom when you have a QS schedule to enter.
- Do sale proceeds during the build reduce debt?
- Yes. Interim proceeds are applied against the debt balance first, before any distribution to equity, which reduces the interest accruing for the remainder of the build.
Common questions
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