The future of lending is here – A best of stability and liquidity
Stretch senior development finance, sometimes known as an over advance loan, is very simple. Loans such as stretch senior loans are designed by professionals’ development finance lenders to give property developers the key to a high level of funding. A stretch senior development loan is efficient, convenient and allows you to access more finance. It also allows developers to build more than one project at a time.
As the name suggested, stretch senior loans can be used for both residential and mixed ventures, but the loan gearing can be increased from 75% to 95% LTGDV. Due to the increased risk, these loans attract higher interest rates than other normal senior loans.
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%.
Mezzanine Finance is an expensive type of finance that is used to top up normal Senior Debt loans where the client requires extra leverage. Although the pricing is more expensive, the mezzanine element of a loan is generally a lot smaller than the senior loan so the blended rate across both facilities evens out to a competitive level. Combined Senior & Mezzanine debt can increase leverage up to 75% LTGDV or 95% LTC, net.
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.