Mezzanine development finance to get your new venture development over the line
Keep your property development project moving with short-term, flexible, and efficient financial assistance in the form of mezzanine development finance. It is an effective type of financial loan that helps a developer reduce the equity against a development loan which typically offers 60% – 75% LTV.. This is essentially a second charge loan where the cost can be repaid through rolled up interest, profit share or even a pre-agreed fee. You can pay back mezzanine development finance in one lump sum, usually from the profit generated from the sale of a new build.
In the development of new builds, you can face several scenarios where you need a loan quickly; in such a case, mezzanine development finance is an ideal option that saves you from extra fees and interest rates.
Senior Development Loans
These loans can be used on residential or mixed-use schemes and are lower down the risk curve from a lenders perspective, therefore attracting the most competitive pricing. They are generally limited to a gross LTGDV of 60% and a gross LTC of 80%.
As the name suggests, stretched senior loans are senior loans that have had the leverage parameters stretched. These loans can also be used for residential and mixed use schemes but the loan gearing can be increased to 75% LTGDV or 95% LTC. Due to the increased leverage and risk these loan attract a higher interest rate than normal senior loans.
This is a partnership between lender and client and is only available to seasoned property developers. If a client does not want to contribute any funds to a scheme, JV funding can be agreed where the lender funds 100% of all project costs and the client is responsible for building the scheme out. There is generally a profit share between the two parties on a 50/50 basis.