WE SPECIALISE CAN ARRANGE MEZZANINE FINANCE ON RESIDENTIAL AND COMMERCIAL PROPERTY DEVELOPMENTS TO COVER UP TO 95% OF COSTS
Mezzanine Finance is a type of development loan that is secured with a second charge, behind the first charge lender which is called the senior debt.
Mezzanine finance is arranged at a higher loan to value than the senior debt. Mezzanine finance is more expensive than the senior debt due to the increased risk that comes from lending at a higher loan to value and as a second charge on a development. A mezzanine lender will usually release funds at the same time as the senior debt lender and will typically be repaid after the senior debt holder has been repaid.
Mezzanine finance allows developers to a lower amount of their own funds into a development, which helps with cash flow as one of the main benefits. If you prefer not to use a significant amount of your own funds then mezzanine finance can make the difference when trying to get a development project of the ground.
Even if you have significant personal funds available you may choose to utilise mezzanine finance which would enable you to retain more of your own funds to contribute towards other development projects.
Many mainstream development lenders will restrict lending to between 65% to 70% of costs which includes the land, build costs and professional fees and subject to a maximum of between 65% to 70% of the gross development value (GDV).
A mezzanine lender can enable you to borrow additional funds up to 95% of total costs. This could mean that a developer would only be required to contribute 10% of the total costs.
The total costs include the purchase price, the build costs, all professional fees and any stamp duty that is payable.
Simply Mortgages work with various different funding partners and mezzanine lenders. We have worked hard over the years to establish good relationships and our experience means we can find the right mezzanine lending partner who will be happy to lend to you and the subject development.
We will work with you to prepare your comprehensive lending proposal including CV’s detailing relevant development experience. The appraisal on the site including build costs and timescales, cash flow, expected gross development value versus site acquisition costs, full planning information and finally a breakdown of your assets and liabilities.
The next step is to contact us on the number below to discuss your requirements in more detail and then we can put you in the best possible position to fund your next development.