MEZZANINE FINANCE

Stretch further.
Build bigger.

Mezzanine finance sits behind your senior debt, filling the gap between what your main lender will provide and the total project cost. It means you put in less of your own money, freeing up capital for your next deal.

Discuss Your Project 01772 217917

Reduce Equity Needed

Up to 90%+ LTC

Second-Charge Lending

Flexible Terms

How mezzanine finance works

Your senior lender (the main development or investment loan) takes a first charge on the property. The mezzanine lender takes a second charge, providing additional funding on top. Together, the two facilities can cover 85-95% of the total project cost.

The trade-off is cost. Mezzanine rates are higher than senior debt because the second-charge lender carries more risk. But the numbers often make sense because the reduced equity requirement lets you take on more projects simultaneously, or simply preserve your cash reserves.

When to use mezzanine

Development projects

Your senior lender offers 65% LTGDV but you only want to put in 10% equity. Mezzanine fills the remaining 25%, letting you hold onto working capital for the build.

Portfolio growth

If your cash is tied up in existing projects, mezzanine lets you start a new acquisition without waiting for previous sales to complete. It is a scaling tool.

Common questions

What does the senior lender think?

The senior lender needs to agree to the mezzanine being in place. Not all senior lenders permit it, so we work with funders who are comfortable with a second charge behind them. This is important to get right at the outset.

Typical cost structure

Mezzanine rates tend to sit between 12% and 20% per annum, with the interest usually rolled up rather than serviced monthly. There is typically an arrangement fee of 1-2%. It sounds expensive in isolation, but the return on equity can be significantly higher because you are deploying less of your own cash.

Profit share arrangements

Some mezzanine lenders charge lower interest but take a share of the development profit instead, typically 20-50%. This can work well if your margins are tight during the build phase but strong on exit. We model both structures for you.

Personal guarantees

Most mezzanine lenders require a personal guarantee from the directors. The extent of the guarantee varies by lender, from partial to full. We will be upfront with you about what each funder requires so there are no surprises.

Numbers that make sense

Mezzanine finance is not right for every deal. We model the cost against your projected returns and only recommend it when the numbers genuinely stack up. If it does not work, we will tell you.

Other specialist services

Development Finance

Ground-up construction and conversion funding.

Bridging Loans

Short-term finance when speed matters.

Property Refurbishment

Light and heavy refurb finance for value-add projects.

Mon – Fri	9am – 6pm
Saturday	By appointment
Sunday	Closed

Stretch further.Build bigger.