Mezzanine Finance

£250,000 – £3 million – 12 to 24 months.

The property world has yet to recover from the banking collapse of 2008 and times are still proving to be hard for property developers. Many developers are finding that their once reliable senior funders are not able to provide even close to the financing given pre-crash. This is presenting them with a stark reality – find the balance from alternative sources or abandon the project.

Senior lenders (otherwise known as first secured lenders) are the primary lenders to a project. They are referred to in this way because their loan is considered senior to all other claims that could be made against the borrower and would be secured by way of first ranking security over a borrower’s assets. In property projects, mezzanine lenders provide a second layer of debt funding behind the senior lender.

This is secured by a second charge to top up the senior debt (first charge) facility. It allows developers and builders to reduce the amount of equity they require to achieve their objectives. Senior debt can typically provide up to 65% of GDV (this is often subject to a cap of 80% of costs), whilst mezzanine finance will provide up to 90% of costs. As a mezzanine lender is in the subordinate risk position, the cost of a mezzanine loan will reflect this, and costs will vary according to the specifics of the project and the judgement of the lender.


Loan Term: 12 to 24 months

Developments: Houses, flats, new builds, conversions,
office to residential and property with a commercial
aspect considered.

Site Location: England, Scotland and Wales in areas
with established demand for new homes.

Borrower: Property developer/house builder with
established track record.

Costs: Typically: Arrangement fee, interest rate, exit fee,
valuation, legal, monitoring surveying fees and nonutilation
fee (for committed but non-utilised capital).

Planning: Sites to have outline planning in place.


  • £250,000 to £3 million
  • Typically 90% loan to cost/70% loan to GDV
  • 90% loan to cost excluding interest rolled up on the facility
  • Loans can include part of the land purchase cost
  • Second charge security

Case Study

• 4 houses in London
• Gross Development Value of £2.3 million
• The total costs of the project were projected at £1.9 million
• Focus Secured Senior Debt 1st Charge bank funding of £1.2 million
• Client invested £300,000 of his own money
• The mezzanine requirement was £407,000 which Focus Commercial
sourced and funded

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