DEVELOPMENT

Mezzanine Finance

A mezzanine loan is a second charge debt that sits below the senior financing and is used by property developers to limit the amount of equity in a development and improve their cash flow.

85% LTC

A maximum of 95% of all acquisition and product costs can be covered.

75% LTGDV

Typically, a maximum of 75% loan to gross development value can be achieved.

18%

The annual interest rate on borrowed funds ranges between 18 and 21%.

A mezzanine loan is a second charge debt that sits below the senior financing and is used by property developers to limit the amount of equity in a development and improve their cash flow.

Mezzanine debt sits between common equity and senior debt in the capital stack because it has a priority of repayment over equity but is subordinate to senior debt.

Similar to senior debt, mezzanine loans have fixed or floating interest rates and set maturity dates.

We can arrange standalone mezzanine finance for your property development secured on a second charge subordinate to the senior lenders.

Key Features

A second charge facility that increases your leverage.

Loan sizes from £300k up to £30M.

All of the United Kingdom considered.

Terms from 12 - 24 months.

All types of residential and mixed-use schemes.

Experienced developers with a history of developing projects of a similar size.

100% secured on the proposed property.

FAQS

Questions We Get Asked

Please get in touch with your advisor if you have any more queries.

How do I know im getting the best terms?

As an independent advisor, we offer specialist solutions from our extensive panel of lenders.

Before we procure terms for your project, we underwrite in house prior to presenting the scheme. This means that we know which lenders will be the most suitable for you as a developer and, ultimately, the scheme that you are building.

Why wouldn’t a developer procure senior development finance from a bank?

Challenger banks and alternative lenders are more common because traditional high-street lenders have never offered this kind of financing before.

How is the loan capital received?

Normally, lenders will offer a lump sum before or during the development process.

How much can I borrow?

This form of financing is bespoke.

Lenders will take into account risk, present or prospective leverage, and interest rates.

They will be influenced by a variety of variables as well, including the project, location, building type, valuation, building expenses, and developer track record.

Do I have to service the interest?

In most cases, the interest and financing fees are rolled up into the loan and paid with the original capital at the end of the loan term.